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# Direct Labour Cost Statement

LondonRegistered Posts: 107
Hi,

Please can someone tell me how to work out the below.

Thanks
Sophie

• Trusted Regular SouthamptonRegistered Posts: 456
Hi,
Was feeling a little bored / fed-up at work and needed brain waking up so here goes:

Standard Cost per labour hours £ 65,880 / 3,660 hours = £ 18
Standard Hours per unit of Proudction 3,660 hours / 18,300 units = 0.2

Labour Rate Variance:
Standard: 4,700 hours @ £ 18 = 84,600
Actual = £ 82,720
Variance = £ 1,880 F

Labour Efficiency Variance:
Standard 18,800 Units @ 0.2 Hours = 3,760 hours @ £ 18 = £ 67,680
Actual 4,700 hours @ £ 18 = 84,600
Varaince = £ 16,920 A

So to answer and complete the cost statement.....

Standard Labour cost of production = £ 67,680
Variances:
Labour Rate = £ (1,880) F
Actual labour cost of production= £ 82,720
• LondonRegistered Posts: 107
crispy said:

Hi,
Was feeling a little bored / fed-up at work and needed brain waking up so here goes:

Standard Cost per labour hours £ 65,880 / 3,660 hours = £ 18
Standard Hours per unit of Proudction 3,660 hours / 18,300 units = 0.2

Labour Rate Variance:
Standard: 4,700 hours @ £ 18 = 84,600
Actual = £ 82,720
Variance = £ 1,880 F

Labour Efficiency Variance:
Standard 18,800 Units @ 0.2 Hours = 3,760 hours @ £ 18 = £ 67,680
Actual 4,700 hours @ £ 18 = 84,600
Varaince = £ 16,920 A

So to answer and complete the cost statement.....

Standard Labour cost of production = £ 67,680
Variances:
Labour Rate = £ (1,880) F
Actual labour cost of production= £ 82,720

Thanks so much for taking the time to do this @crispy, i hope your Friday goes quickly
• Trusted Regular SouthamptonRegistered Posts: 456
Haha - Thanks me too

Hope my answer makes sense and is of some use.

• LondonRegistered Posts: 107
crispy said:

Haha - Thanks me too

Hope my answer makes sense and is of some use.

@crispy what you've written does make sense thank you, one question i do have for labour cost the answer shows as -15040 do you know how they worked that out?
• Trusted Regular SouthamptonRegistered Posts: 456
Hello,

The £ 15,040 just comes from £ 16,920 - £ 1,880

HTH