CA Inter P4 · Chapter 12 · Question 4 of 10
Standard labour per unit is 3 hours at ₹60 per hour. Actual output was 1,800 units. Workers were paid for 5,700 hours at ₹62 per hour, including 120 hours of abnormal idle time. The labour rate variance is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) ₹11,400 (Adverse)
Explanation
Labour rate variance = (standard rate - actual rate) x actual hours paid = (₹60 - ₹62) x 5,700 = -₹11,400, i.e. ₹11,400 Adverse. The rate variance is computed on all hours paid, including idle hours.
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