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Direct Labour Cost Statement

sophie_612sophie_612 LondonRegistered Posts: 107
Hi,

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

Thanks
Sophie

Comments

  • crispycrispy 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
    Labout Efficiency £ 16,920 A
    Actual labour cost of production= £ 82,720
  • sophie_612sophie_612 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
    Labout Efficiency £ 16,920 A
    Actual labour cost of production= £ 82,720

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

    Hope my answer makes sense and is of some use.

  • sophie_612sophie_612 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?
  • crispycrispy Trusted Regular SouthamptonRegistered Posts: 456
    Hello,

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

    HTH
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