The following information has been provided by a company: Number of units produced and sold : 7,000 Standard labour rate per hour :9 Actual hours…

CA Intermediate · Cost and Management Accounting · PYQS · January 2025
The following information has been provided by a company: Number of units produced and sold : 7,000 Standard labour rate per hour :9 Actual hours worked : 17,820 hours Labour efficiency : 106.8% Labour rate variance :71,280 (A) You are required to calculate : (i) Actual labour rate per hour (1 Marks) (ii) Standard hours required for 7,000 units (2 Marks) (iii) Labour Efficiency variance (1 Marks) (iv) Standard labour cost per unit (1 Marks) (v) Actual labour cost per unit (1 Marks)

Suggested Answer and Working Notes:

(i) Actual Hours Worked 17,820 Standard Rate Per hour 9 Labour Rate Variance 71280 (A) Labour Rate Variance = (Standard Rate – Actual Rate) Actual Hours (9 - Actual Rate) 17,820 = -71,280 (9 - Actual Rate) = -4 Actual Rate = 13 (ii) Labour Efficiency = (Standard Hours x 100) / Actual Hours 106.8% = Standard Hours / 17,820 Standard Hours = 19,031.76 (iii) Labour Efficiency Variance = (Standard Hours – Actual Hours) x Standard Rate = (19,031.76 – 17,820) x 9 = 10,905.84 (F) (iv) Standard Labour Cost per unit= (19,031.76 x 9) / 7,000 = 24.47 (v) Actual Labour cost per unit = (17,820 x 13) / 7,000 = 33.09

Topics: Standard Costing

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