(a) Discuss the factors which should be considered when setting the standard labour cost of a product.

(b) Settah Ltd manufactures two different types of component in two production departments, a press shop and a fitting department.

The budgeted production and standard labour costs for Period 5 were

Throughout Period 5 there were 135 direct workers employed in the Press Shop and 145 in the Fitting Department. All employees in both departments attended and were paid for a 40 hour week in each of the four weeks in Period 5. However during the final week in the Fitting Department each employee was idle for 3 hours; the result of poor material scheduling.
Required:
Calculate the appropriate direct wage variances for Period 5.

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Press Shop Fitting Dept Budgeted production: Component A 6,000 units 5,000 units Component B 8,000 units 9,000 units Standard labour cost per unit: Component A 3 Component B 6 Standard wage rate per hour 3 884 8 6 4 Actual results for Period 5 were: Production: Component A 4,000 units 6,000 units Component B 7,800 units 8,600 units Gross wages paid to direct workers 60,000 90,000