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    Question

    The standard time for a task is 4 hours per unit at a

    wage rate of ₹60 per hour. In a period, 500 units were produced in 1,900 hours, and the actual wage rate was ₹65 per hour. What is the Labour Rate Variance?
    A ₹9,500 Adverse Correct Answer Incorrect Answer
    B ₹9,500 Favourable Correct Answer Incorrect Answer
    C ₹6,000 Adverse Correct Answer Incorrect Answer
    D ₹6,000 Favourable Correct Answer Incorrect Answer
    E ₹3,500 Adverse Correct Answer Incorrect Answer

    Solution

    Labour Rate Variance = Actual Hours (AH) x (Standard Rate - Actual Rate). = 1,900 x (60 - 65) = 1,900 x (-5) = ₹9,500 Adverse (since actual rate paid is higher).

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