Same data: Labour efficiency variance is:
A₹4,000 favourable
B₹8,400 adverse
C₹4,000 adverse
D₹12,400 adverse
Answer & Solution
Correct answer: C. ₹4,000 adverse
1. Labour efficiency variance = (Standard hours − Actual hours) × Standard rate.
2. Substitute: (4,000 − 4,200) × 20 = −200 × 20.
3. = −4,000, indicating an adverse variance.
4. Hence the labour efficiency variance is ₹4,000 adverse.
_Source: ICAI BoS Inter Paper 3, Ch 13 "Standard Costing", §13.5.2 Illus 7c_
Related questions
Standard costing is most useful for control because standards are setLabour efficiency variance measures the effect of a difference inWhen material purchased is not stated in a question, actual quantity for the price variancStandard quantity 500 kg at 20 per kg, actual 520 kg at 20 per kg. The material usage variAn adverse material price variance is generally the responsibility of theMaterial cost variance can be split intoMaterial price variance is measured asMaterial cost variance is