Data relating to standard labour cost of one unit of product BZ5 is as follows:
800 hours @ £5.00 per hour = £4,000
The management have observed that the actual labour costs incurred in the production of one BZ5 are 750 hours at a wage rate of £6.00 per hour.
Total labour variance = Actual labour cost – Standard labour cost
|
Actual labour cost |
Standard labour cost |
Labour cost variance |
|
750 x £6 = £4,500 |
800 x £5 = £4,000 |
= £50 (Adverse) |