Same data: Labour rate variance is:
A₹4,000 adverse
B₹8,400 adverse
C₹12,400 adverse
D₹8,400 favourable
Answer & Solution
Correct answer: B. ₹8,400 adverse
1. Labour rate variance = (Standard rate − Actual rate) × Actual hours.
2. Substitute: (20 − 22) × 4,200 = −2 × 4,200.
3. = −8,400, indicating an adverse variance.
4. Hence the labour rate variance is ₹8,400 adverse.
_Source: ICAI BoS Inter Paper 3, Ch 13 "Standard Costing", §13.5.2 Illus 7b_
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