Using the same data (standard 3 hours at ₹60 per unit; output 1,800 units; 5,700 hours paid of which 120 hours were abnormal idle time), the labour efficiency variance is:

Correct answer: A) ₹10,800 (Adverse)

Explanation

Standard hours for actual output = 1,800 x 3 = 5,400. Hours actually worked = 5,700 - 120 = 5,580. Efficiency variance = (standard hours - actual hours worked) x standard rate = (5,400 - 5,580) x ₹60 = ₹10,800 Adverse. Idle time of 120 hours x ₹60 = ₹7,200 Adverse is shown separately as the idle time variance.