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?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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