A company adopts standard cost practices for it's direct labour cost and factory overhead cost. The activities level and cost per direct labour hour are summarized below: Activities level in DLH…

A company adopts standard cost practices for it's direct labour cost and factory overhead cost. The activities level and cost per direct labour hour are summarized below:

Activities level in DLH 20,000 40,000 Direct labour cost (Rs) (Rs) (Rs) 2 Skilled labour @ Rs.2.0 per hour 80,000 160,000 3 Semi-skilled labour @ Rs.1.0 per hour 60,000 120,000 4 Unskilled labour @ Rs. 0.5 per hour 40,000 80,000

Total labour cost 180,000 360,000 Factory overheads : (Rs.) (Rs.) Indirect materials 60,000 80,000 Supervision cost 40,000 60,000 Repairs and maintenance 60,000 100,000 Rent and taxes 20,000 20,000 Depreciation 40,000 40,000

Normal capacity 35,000 DLH Hours worked and paid 32,000 DLH Hours produced 28,000 DLH Actual overhead incurred Rs. 300,000 Actual Wages paid : 2 Skilled labour @ Rs. 2 per hour ……… Rs. 128,000 2 Semi-skilled labour @ Rs. 1.5 per hour ……… Rs. 96,000 5 Unskilled labour @ Rs. 0.90 per hour ……… Rs. 144,000 Rs. 368,000

Required : • Direct labour cost and factory overhead budget for 30,000 DLH • Analysis of variance showing direct labour efficiency, mix, rate and cost • Three overhead variances [5+5+5=15]