The standard direct labour cost of product Berg is as follows: Three hours of skilled labour at £4 per hour is equal to £12 per unit of product Berg. During the current period, 800 units of the product were made, and the skilled direct labour cost was £10,200 for 2,000 hours worked. Based on the above information, what was the direct labour total variance? a) £600 Adverse b) £800 Favourable c) £800 Adverse d) £600 Favourable
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
The standard direct labour cost of product Berg is as follows: Three hours of skilled labour at £4 per hour is equal to £12 per unit of product Berg. During the current period,
800 units of the product were made, and the skilled direct labour cost was £10,200 for 2,000 hours worked.
Based on the above information, what was the direct labour total variance?
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a) £600 Adverse
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b) £800 Favourable
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c) £800 Adverse
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d) £600 Favourable
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