A company adopts standard cost practices for it's direct labour cost and factory overhead cost. The activities level and cost per direct labour hour…
BBS Cost and Management Accounting · 2080 · Solved Question with Answer · Video Solution
A company adopts standard cost practices for it's direct labour cost and factory overhead cost. The activities level and cost per direct labour hour are summarized below:
| Activities level in DLH | 20,000 | 40,000 |
| Direct labour cost (Rs) | (Rs) | (Rs) |
| 2 Skilled labour @ Rs.2.0 per hour | 80,000 | 160,000 |
| 3 Semi-skilled labour @ Rs.1.0 per hour | 60,000 | 120,000 |
| 4 Unskilled labour @ Rs. 0.5 per hour | 40,000 | 80,000 |
| Total labour cost | 180,000 | 360,000 |
| Factory overheads : | (Rs.) | (Rs.) |
| Indirect materials | 60,000 | 80,000 |
| Supervision cost | 40,000 | 60,000 |
| Repairs and maintenance | 60,000 | 100,000 |
| Rent and taxes | 20,000 | 20,000 |
| Depreciation | 40,000 | 40,000 |
Normal capacity: 35,000 DLH
Hours worked and paid: 32,000 DLH
Hours produced: 28,000 DLH
Actual overhead incurred: Rs. 300,000
Actual Wages paid :
2 Skilled labour @Rs. 2 per hour .................. Rs. 128,000
2 Semi-skilled labour @ Rs. 1.5 per hour ....... Rs. 96,000
5 Unskilled labour @ Rs. 0.90 per hour ......... Rs. 144,000
Total: Rs. 368,000
Required :
Direct labour cost and factory overhead budget for 30,000 DLH
Analysis of variance showing direct labour efficiency, mix, rate and cost
Three overhead variances
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