# Material Labour/Labor :: Combined : Problems and Solutions

# Problem 1

Standards per unit of product:

Direct material 24 Kg. @ 25 per kg.

Direct labour 12 hours @ 6 per hour

Actual details for given financial period:

Output produced (units) : 4,200

Direct materials:

Purchased: 1,25,000 kg for 32,50,000

Issued to production: 1,05,000 kg

Direct labour: 52,800 hours worked for 3,30,000

There was no work – in- progress at the beginning or end of the period.

You are required to calculate the material and labour/labor variances. (Material Price variance should be based on issues to production)

**Solution**

[TMCV = ; TMPV = ; TMUV/TMQV = ; TMMV = and TMYV/TMSUV = ;

LCV = ; LRPV = ; LEV/LUV = ; LITV = – LMV/LGCV = 0 and LYV/LSUV = ;]

# Problem 2

Estabished standard costs are:

(i) | Materials: 12 pieces per unit at 64 paise per piece. |

(ii) | Labour: 2 hours per unit at 5.25 per hour. |

(a) | Materials: 29,400 pieces at a total of 17,640 |

(b) | Labour Costs : 26,000 |

(c) | Direct- Labour hours worked were 5,000 |

(d) | Inventories: Beginning of the month, nil; End of the month, nil |

(i) | Computation of material and labour/labor variances. |

(ii) | A brief explanation to management giving the significance of each variance. |

**Solution**

[TMCV = ; TMPV = ; TMUV/TMQV = ; TMMV = and TMYV/TMSUV = ;

LCV = ; LRPV = ; LEV/LUV = ; LITV = – LMV/LGCV = 0 and LYV/LSUV = ;]

# Problem 3

Materials 60 kgs @ 15 per kg,

Labour 240 hours @ 5.00 per hour

Actual cost for the month

Material 6,230 kgs. @ 16 per kg,

Labour 25,100 hours @ 5.20 per hour.

Actual production – 100 units.

**Solution**

[TMCV = ; TMPV = ; TMUV/TMQV = ; TMMV = and TMYV/TMSUV = ;

LCV = ; LRPV = ; LEV/LUV = ; LITV = – LMV/LGCV = 0 and LYV/LSUV = ;]

# Problem 4

Material cost - 6 kg. @ 12.50 = 75 per unit

Wages 12 hours @ 5 = 60.00 per unit The actuals which have emerged from business operations are as under :

Production : 8,000

Materials consumed - 46,500 kg @ 12.40 = 5,76,600.

Wages paid 98,000 hours @ 12 = 11,76,000

Caluculate appropriate material and labour variances.

**Solution**

[TMCV = ; TMPV = ; TMUV/TMQV = ; TMMV = and TMYV/TMSUV = ; LCV = ;

LRPV = ; LEV/LUV = ; LITV = – LMV/LGCV = 0 and LYV/LSUV = ;]

# Problem 5

Material : 75 kg. @ 12 per kg.

Labour : 16 hrs. @ 7.50 per hour.

On completion of the production of a unit, it was found that 78 kg. of material costing 13.25 per kg. has been consumed and that the time taken was 15 hours, the wage rate being 7.80 per hour.

You are required to (a) analyse material and labour variances and (b) indicate their significance.

**Solution**

[TMCV = ; TMPV = ; TMUV/TMQV = ; TMMV = and TMYV/TMSUV = ;

LCV = ; LRPV = ; LEV/LUV = ; LITV = – LMV/LGCV = 0 and LYV/LSUV = ;]

# Problem 6

1 tonne of material input yields a standard output of 1 lakh units.

Number of employees is 150.

The standard wage rate per employee per day is 8

Standard price of material is 25 per kg.

Actual quantity of material issued by production department 10 tonnes.

Actual output is 9.5 lakh units.

Actual wage rate per day is 8.40.

Standard daily output per employee is 100 units.

Total number of days worked is 54.

Idle time paid for and included above is ½ day.

**Solution**

[TMCV = ; TMPV = ; TMUV/TMQV = ; TMMV = and TMYV/TMSUV = ;

LCV = ; LRPV = ; LEV/LUV = ; LITV = – LMV/LGCV = 0 and LYV/LSUV = ;]

# Problem 7

Per Completed Price | |

Material – 8 lbs. @ 4.60 | 36.80 |

Labour – 6 Hours @ 6.20 | 37.20 |

Purchase for the month of July 1995 amounted to 30,000 lbs. of material at the total invoice price of 1,35,000.

Production records for the month of July,1995 showed the following actual results.

Material requisitioned and used | 25,700 | lbs |

Direct labour – 15,150 hours | 48,480 |

Calculate appropriate material and labour variances.

**Solution**

[TMCV = ; TMPV = ; TMUV/TMQV = ; TMMV = and TMYV/TMSUV = ;

LCV = ; LRPV = ; LEV/LUV = ; LITV = – LMV/LGCV = 0 and LYV/LSUV = ;]

# Problem 8

Actual | Budgeted | |
---|---|---|

Units of Finished Goods Produced | 90,000 | 1,00,000 |

Units of Finished Goods Produced | 90,000 | 1,00,000 |

Materials: | ||

Units | 1,82,000 | 2,00,000 |

Cost of Materials per unit | 0.52 | 0.50 |

Total Cost of Materials | 94,640 | 1,00,000 |

Direct Labour Hours (2 units of finished goods in one hour) | 47,000 | 50,000 |

Wages | 2.10 per hour | 2.00 per hour |

Total Direct Labour Cost | 98,700 | 1,00,000 |

Calculate variances.

**Solution**

[TMCV = ; TMPV = ; TMUV/TMQV = ; TMMV = and TMYV/TMSUV = ;

LCV = ; LRPV = ; LEV/LUV = ; LITV = – LMV/LGCV = 0 and LYV/LSUV = ;]

# Problem 9

Budgeted data for March:

Units to be manufactured | 1,50,000 |

Units of direct Material required (based on std.rates) | 4,95,000 |

Planned Purchase of Raw Materials (units) | 5,40,000 |

Average unit cost of Direct Material | 8 |

Direct Labour Hours per unit of finished goods | ¾ hr. |

Direct Labour Cost(total) | 29,92,500 |

Units actually manufactured | 1,60,000 |

Direct Material Cost (purchase cost based on units actually issued) | 43,41,900 |

Direct Material Cost (purchase cost based on units actually purchased) | 45,10,000 |

Average unit cost of Direct Material | 8.20 |

Total Direct Labour hours for the month | 1,25,000 |

Total Direct Labour Cost for the month | 33,75,000 |

**Solution**

[TMCV = ; TMPV = ; TMUV/TMQV = ; TMMV = and TMYV/TMSUV = ;

LCV = ; LRPV = ; LEV/LUV = ; LITV = – LMV/LGCV = 0 and LYV/LSUV = ;]

# Problem 10

Standard | Actual | ||||||

Input | Kg. | Total | Kg. | Total | |||

500 | Material @ 39 per kg. | 19,500 | 500 | Material @ 42 per kg | 21,000 | ||

Labour/Labor 4,000 hrs @ 1.50 per hour. | 6,000 | Labour/Labor 4,000 hrs @ 1.50 per hour. | 6,000 | ||||

Normal Loss | 20 | 40 | Actual Loss | ||||

Output | 480 | 25,500 | 460 | 27,000 |

**Solution**

[TMCV = ; TMPV = ; TMUV/TMQV = ; TMMV = and TMYV/TMSUV = ;

LCV = ; LRPV = ; LEV/LUV = ; LITV = – LMV/LGCV = 0 and LYV/LSUV = ;]

# Problem 11

Material | |

5 kg. @ 40 per kg | 200 |

Labour/Labor | |

40 hrs.@ 1.00 per hour | 40 |

240 |

Actual production 100 units

Total | |
---|---|

Material 490kg. @ 42 each | 20,580 |

Labour 3960 hrs. @ 1.10 per hour | 4,356 |

24,936 |

Calculate variances.

**Solution**

[TMCV = ; TMPV = ; TMUV/TMQV = ; TMMV = and TMYV/TMSUV = ;

LCV = ; LRPV = ; LEV/LUV = ; LITV = – LMV/LGCV = 0 and LYV/LSUV = ;]

# Problem 12

(a) Actual production - 1,500 kg.

Materials consumed | Labour deployed | |||||
---|---|---|---|---|---|---|

Type | Quantity (kg) | Rate ( per kg) | Worker | Timeworked (hours) | Rate ( per hour) | |

A | 550 | 5.00 | P | 32 | 11.00 | |

B | 200 | 6.00 | Q | 14 | 9.00 | |

C | 350 | 2.00 | R | 20 | 11.00 | |

D | 400 | 2.00 | S | 10 | 18.00 |

Consumption of Materials | Deployment of Labour | |||||
---|---|---|---|---|---|---|

Type | Quantity (kg) | Rate ( per kg) | Worker | Timeworked (hours) | Rate ( per hour) | |

A | 400 | 4.00 | P | 20 | 10.00 | |

B | 100 | 5.00 | Q | 10 | 8.00 | |

C | 200 | 2.50 | R | 15 | 12.00 | |

D | 300 | 6.00 | S | 7 | 20.00 |

**Solution**

[TMCV = ; TMPV = ; TMUV/TMQV = ; TMMV = and TMYV/TMSUV = ;

LCV = ; LRPV = ; LEV/LUV = ; LITV = – LMV/LGCV = 0 and LYV/LSUV = ;]

# Problem 13

Direct Materials: | |

2 units of A at 4 per unit | 8.00 |

3 units of B at 3 per unit | 9.00 |

15 units of C at 1 per unit | 15.00 |

32.00 | |

Direct labour 3 hours (@ 8 per hour) | 24.00 |

Total Standard Price Cost | 56.00 |

12,500 units of A at 4.40 per unit

18,000 units of B at 2.80 per unit

88,500 units of C at 1.20 per unit

The company worked 17,500 direct labour hours during the year. For 2,500 of these hours the company paid at 12 per hour while for the remaining the wages were paid at the standard rate.

Calculate Material and Labour Variances.

**Solution**

[TMCV = ; TMPV = ; TMUV/TMQV = ; TMMV = and TMYV/TMSUV = ;

LCV = ; LRPV = ; LEV/LUV = ; LITV = – LMV/LGCV = 0 and LYV/LSUV = ;]

# Problem 14

Standard data | Total | Actual data | Total | |||||
---|---|---|---|---|---|---|---|---|

kg | kg | |||||||

450 | of Mat. A @ 20/kg | 9,000 | 450 | @ 19/kg | 8,550 | |||

360 | of Mat. B @ 10/kg | 3,600 | 12,600 | 360 | @ 11/kg | 3,960 | 12,510 | |

810 | 810 | |||||||

2,400 skilled hours @ 2/hr | 4,800 | 2,400 hours @ 2.25/hr | 5,400 | |||||

1,200 un-skilled hours @ 1/hr | 1,200 | 6,000 | 1,200 hours @ 1.25/hr | 1,500 | 6,900 | |||

90 | Normal Loss | 50 | Actual Loss | |||||

720 | 18,600 | 760 | 19,410 |

**Solution**

# Problem 15

Standard | Actual | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|

Input | Material | Per | Total | Input | per | Total | |||||

kg | kg | kg | kg | ||||||||

400 | A | @ 50 | 20,000 | 420 | @ 45 | 18,000 | |||||

200 | B | @ 20 | 4,000 | 240 | @ 25 | 6,000 | |||||

100 | C | @ 15 | 1,500 | 25,500 | 90 | @ 15 | 1,350 | 26,250 | |||

700 | 750 | ||||||||||

Labour | |||||||||||

100 Man hrs. @ 2/hr. | 200 | 120 hrs @ 2.50/hr. | 300 | ||||||||

200 Women hrs. @ 1.50/hr. | 300 | 500 | 240 hrs @ 1.60/hr. | 384 | 684 | ||||||

25 | Normal Loss | 75 | Actual Loss | ||||||||

675 | 26,000 | 675 | 26,934 |

**Solution**