Question 16.TQ.6: The following information relates to Bruce Limited: Actual h...

Accounting for Non-Accounting Students

The following information relates to Bruce Limited:

Actual hours: 1000.
Actual wage rate per hour: £6.50.
Standard hours for actual production: 900.
Standard wage rate per hour: £6.00.

Required:
Calculate the following variances:

(a) direct labour total
(b) direct labour rate
(c) direct labour efficiency.

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Variances for Bruce Limited:

(a) Direct labour total variance:	£	£
Actual hours × actual hourly rate = 1000 hrs × £6.50	6500	6500
Less: Standard hours for actual production × standard hourly rate = 900 hrs × £6.00	5400
£1100		(A)
(b) Direct labour rate variance:
(Actual hourly – standard hourly rate) × actual hours = (£6.50 – 6.00) × 1000 hrs	£500	(A)
(c) Direct labour efficiency variance:
Actual hours – standard hours for actual production) × standard hourly rate = (1000 hrs-900) × £6.00	£600	(A)

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