Question No:1

ABC Manufacturing company uses standard costing system for manufacturing its product PQ. The following is the standards relating labour hours to produce one unit of PQ

Labour	Hours	Rate(OMR)
Skilled	6	8
Semi- skilled	9	5
Un skilled	12	3

In the month of March 10000 units were produced. The details are given below:

Labour	Hours	Rate( OMR
Skilled	55000	8.5
Semi skilled	112000	6
Unskilled	125000	4

Actual idle hours during the month of March:

Skilled- 600 hours

Semi- skilled- 700 hours

Unskilled- 800 hours

Required:

1. Labour cost variance
2. Labour rate variance
3. Labour efficiency variance
4. Labour Mix variance
5. Labour yield variance
6. Idle time variance
7. Show the effect on labour rate variance if 20000 hours of skilled labour are paid @ 6 per hour and the balance @8 per hour.

II. Discuss how material usage standard is set in your own words.