Arrange the data in a Working Table
Making a working table would form the first step for your problem solving effort.
True, your ability to solve problems on this topic is one way judged/decided by your ability to recollect the formulae. But, if you adopt the formulae that are capable of being used in all cases, it won't be difficult at all.
Yes, it would be very easy.
Your problem solving capability is limited by your ability to interpret the problem. If you notice all the examples we have given, the data in all the problems is structured (presented) in a similar manner, in the form of a table.
There lies the trick to make problem solving easy. Whatever may be the way the problem is presented (what we call problem models), get habituated to arranging the information in the form of a table as given below. Once you arrange that information, it would be very easy for you. Recollect the relevant formula and apply it.
If you try to understand the logic behind each formula, recollecting them also would be very easy. That is the reason we recommend the student to use the formula that is capable of being used in all cases.
Working table for arranging your data.

Standard [Production: SO] 
Actual [Production: AO] 
Time (hrs) 
Rate (Rs/hr)
 Cost (Rs) 
Rate (Rs/hr) 
Total/Gross 
Abnromal 
Net 
Time (hrs) 
Cost (Rs) 
Time (hrs) 
Cost (Rs) 
Time (hrs) 
Cost (Rs) 
Sk 
ST_{Sk} 
SR_{Sk} 
SC_{Sk} 
AR_{Sk} 
AT_{(G)Sk} 
AC_{(G)Sk} 
AT_{(Id)Sk} 
AC_{(Id)Sk} 
AT_{(N)Sk} 
AC_{(N)Sk} 
Se 
ST_{Se} 
SR_{Se} 
SC_{Se} 
AR_{Se} 
AT_{(G)Se} 
AC_{(G)Se} 
AT_{(Id)Se} 
AC_{(Id)Se} 
AT_{(N)Se} 
AC_{(N)Se} 
Un 
.. 
.. 
.. 
.. 
.. 
.. 
.. 
.. 
.. 
.. 
Total
 ST_{Mix} 
SR_{Mix} 
SC_{Mix} 
AR_{Mix} 
AT_{(G)Mix} 
AC_{(G)Mix} 
AT_{(Id)Mix} 
AC_{(Id)Mix} 
AT_{(N)Mix} 
AT_{(N)Mix} 
There are two approaches to solving problems.
Using the given data as it is
If you use the formulae that are capable of being used in all situations, you just need to build the working table from the given data and things from thereon would be involving substituting data and evaluating the result.
This would be the best approach as all the adjustments you need to make with regard to the difference between the AO and SO as well as AT_{(N)Mix} and ST_{Mix} would be taken care of within the formulae itself.
By Recalculating Standards where needed
If at all you wish to calculate variances by recalculating the standards, you have to recalculate the standards twice.
 Once based on output (Standards for Actual Output) to ensure the condition SO = AO. The values for ST and SO for calculating LCV and LEV/LUV should be considered from the working table ensuring this condition is satisfied.
 The Second time based on input (Standards for Actual Input) to ensure the condition AT_{(N)Mix} = ST_{Mix}. The values for ST and SO for calculating LMV/GCV and LYV/LSEV/LSUV should be considered from the working table ensuring this condition is satisfied.
All other values i.e. SR and the actual data (AR, AT, AO) are not influenced by these conditions i.e., they would be the same in all cases.
Recommended Formulae!!!
The formulae that can be used in all situations should be used so that you would get accustomed to the formulae after doing some problems and would not be worried about not being able to recollect the correct formula.

Formulae that can be used in all cases



 Labour/Labor Cost Variance
⇒ LCV = ({ 

× ST} × SR) − (AT_{(G)} × AR)

 Labour/Labor Rate of pay Variance
⇒ LRPV = (ST − AT_{(G)}) × AR

 Labour/Labor (Gross) Efficiency/Usage Variance
⇒ LEV/LUV_{(G)} 
= 
({ 

× ST} − AT_{(G)}) × SR 

 Labour/Labor (Net) Efficiency/Usage Variance
⇒ LEV/LUV_{(N)} 
= 
({ 

× ST} − AT_{(N)}) × SR 

 Labour/Labor Idle Time Variance
⇒ LITV 
= 
− AT_{(Id)} × SR

 Labour/Labor Mix/GangComposition Variance
⇒ LMV/GCV = ({ 

× ST } − AT) × SR 
 Labour/Labor Yield/SubEfficiency/SubUsage Variance
⇒ LYV/LSEV/LSUV 
= 
(AO − ({ 

× SO } × SR(SO) ) 


Where
 ST = Standard Time of each Labour/Labor Type
 SO = Standard Output
 SR = Standard wage Rate for each Labour/Labor Type
 ST_{Mix} = Standard Time of Mix
 SC_{Mix} = Standard Cost of Mix
 SR(SO) = Standard Rate of Standard Output/Yield
 AT(G) = Gross Actual Time of each Labour/Labor Type
 AT(Id/Ab) = Abnormal Idle Time for each Labour/Labor Type
 AT(N) = Net Actual Time for each Labour/Labor Type
 AR = Actual Wage Rate for each Labour/Labor Type
 AO = Actual Output
 AT_{(G)Mix} = Gross Actual Time of Mix
 AT_{(Ab/Id)Mix} = Abnormal Idle time in Actual Mix
 AT_{(N)Mix} = Net Actual Time of Mix
Note :
If you understand the concept behind the variance, remembering the formula would not poce a problem at all. You may use the following tips to aid your effort (we feel even this should not be necessary for an average student).
 Remember the simple formulae excluding the correction/adjustment factor in which case the formulae for LEV/LUV and LMV/GCV would be the same.
 The ST is to corrected/adjusted by a factor:
 AO/SO for calculating the LCV, LEV/LUV_{(G)}and LEV/LUV_{(N)}
 AT_{(N)Mix}/ST_{Mix} for calculating LMV/GCV and LYV/LSEV/LSUV
 The SO is to be corrected/adjusted by a factor
 AT_{(N)Mix}/ST_{Mix} for calculating LYV/LSEV/LSUV
LYV/LSEV/LSUV is dependent on "SO" and not "ST".
Calculating Total Variances
Where there are two or more labour/labor types involved in the production process, total variances can be calculated as the sum of the variances for each labour/labor type calculated separately using the above formulae.
LYV/LSEV/LSUV cannot be calculated for each labour/labor type separately. Only TLYV/TLSEV/TLSUV can be calculated using the above formula.
TLCV variance can be calculated using a separate formula without requiring to calculate the individual variances.

Three kinds of labourers/laborers Men, Women and Boys are required for the manufacture of a product. They are paid at the rate of Rs. 5 per hour, Rs. 4 per hour and Rs. 3 per hour respectively. The standards reveal that a gang of 25 men, 20 women and 40 boys are required to work for a time of 40 hrs over a week to bring out an output of 5,000 units.
During a 2 week period the actual production data revealed that there were 28 men, 20 women and 35 boys working in the gang and were paid @ Rs. 6, Rs. 3 and Rs. 3 per hour respectively. In achieving an output of 10,200 units, the average weekly work hours were 42.
There was a breakdown of power and no work was possible for 5 hours on a day. However, during this time the boys had been working as their work does not need power.
Calculate all possible variances realting to labour/labor.

Working Notes » Working Table



Working Notes:
Calculation of work times.
Particulars 
Men 
Women 
Boys 
Total 
Standard/Budgeted 
(a) Number Working 
25 
20 
40 

(b) Weekly Work Time [In hrs] 
40 
40 
40 

Total Weekly Work Time (in hrs) [(a) × (b)] 
1,000 
800 
1,600 
3,400 
Actual 
(c) Number Working 
28 
20 
35 

Actual [Gross/Total] 
(d) Weekly Work Time [In hrs] 
42 
42 
42 

Total Work Time (in hrs) [(c) × (d)] 
2,352 
1,680 
2,940 
6,972 
Actual [Abnormal/Idle] 
(e) Abnormal Loss Time [in hrs] 
5 
5 
0 

Total Abnormal Loss Time (in hrs) [(c) × (e)] 
140 
100 
0 
240 
Actual [Net] 
[Actual [Total] − Actual [Abnormal]] [in hrs] 
2,212 
1,580 
2,940 
6,732 
Working Table
Working table incorporating the data in the problem

Standard [Production: 5,000 units] 
Actual [Production: 10,200 units] 
Time (hrs) 
Rate (Rs/hr)
 Cost (Rs) 
Rate (Rs/hr) 
Total 
Normal 
Abnromal 
Time (hrs) 
Cost (Rs) 
Time (hrs) 
Cost (Rs) 
Time (hrs) 
Cost (Rs) 
Men 
1,000 
5 
5,000 
6 
2,352 
14,112 
2,212 
13,272 
140 
840 
Women 
800 
4 
3,200 
3 
1,680 
5,040 
1,580 
4,740 
100 
300 
Boys 
1,600 
3 
4,800 
3 
2,940 
8,820 
2,940 
8,820 


Total
 3,400 

13,000 

6,972 
27,972 
6,732 
26,832 
240 
1,140 
SR(SO) 
= 


⇒ SR(SO) 
= 


⇒ SR(SO) 
= 
Rs. 2.60/unit 

• Labour/Labor Cost Variance [LCV]
LCV = 
({ 

× ST } × SR ) − (AT_{(G)} × AR) 
Using, LCV_{Lab} = 
({ 

× ST_{Lab} } × SR_{Lab} ) − (AT_{(G)Lab} × AR_{Lab}) 
Labour/Labor Cost Variance due to labourers/laborers who are
• Men 
= 
({ 

× 1,000 hrs } × Rs. 5/hr ) − (2,352 hrs × Rs. 6/hr)



= 
(2.04 × 1,000 hrs × Rs. 5/hr) − (Rs. 14,112) 

= 
Rs. 10,200 − Rs. 14,112 

= 
− Rs. 3,912 
⇒ LCV_{M} 
= 
− Rs. 3,912 
[Adv] 
• Women 
= 
({ 

× 800 hrs } × Rs. 4/hr ) − (1,680 hrs × Rs. 3/hr) 


= 
(2.04 × 800 hrs × Rs. 4/hr) − (Rs. 5,040) 

= 
Rs. 6,528 − Rs. 5,040 

= 
+ Rs. 1,488 
⇒ LCV_{W} 
= 
+ Rs. 1,488 
[Pos] 
• Boys 
= 
({ 

× 1,600 hrs } × Rs. 3/hr ) − (2,940 hrs × Rs. 3/hr) 


= 
(2.04 × 1,600 hrs × Rs. 3/hr) − (Rs. 8,820) 

= 
Rs. 9,792 − Rs. 8,820 

= 
+ Rs. 972 
⇒ LCV_{B} 
= 
+ Rs. 972 
[Pos] 


Total Labour/Labor Cost Variance ⇒ TLCV 
= 
− Rs. 1,452 
[Adv] 
• Labour/Labor Rate of Pay Variance [LRPV]
LRPV = AT_{G} × (SR − AR)
Using,
LRPV = AT_{(G)Lab} × (SR_{Lab} − AR_{Lab})
Labour/Labor Rate of Pay Variance due to labourers/laborers who are
• Men 
= 
2,352 hrs (Rs. 5/hr − Rs. 6/hr 

= 
2,352 hrs (− Rs. 1/hr) 

= 
− Rs. 2,352 
⇒ LRPV_{M} 
= 
− Rs. 2,352 
[Adv] 
• Women 
= 
1,680 hrs (Rs. 4/hr − Rs. 3/hr) 

= 
1,680 hrs (+ Rs. 1/hr) 

= 
+ Rs. 1,680 
⇒ LRPV_{W} 
= 
+ Rs. 1,680 
[Fav] 
• Boys 
= 
2,940 hrs (Rs. 3/hr − Rs. 3/hr) 

= 
2,940 hrs (0) 

= 
0 
⇒ LRPV_{B} 
= 
Nil 
[None] 


Total Rate of Pay Variance ⇒ TLRPV 
= 
+ Rs. 672 
[Fav] 
• Labour/Labor (Gross) Efficiency/Usage Variance [LEV/LUV_{(G)}]
Using, LEV/LUV_{(N)Lab} 
= 
({ 

× ST_{Lab}} − AT_{(G)Lab}) × SR_{Lab} 


Labour/Labor Efficiency/Usage Variance due to the labourers/laborers who are
• Men 
= 
({ 

× 1,000 hrs − 2,352 hrs) × Rs. 5/hr} 



= 
({2.04 × 1,000 hrs} − 2,352 hrs) × Rs. 5/hr 

= 
({2,040 hrs − 2,352 hrs) × Rs. 5/hr 

= 
(− 312 hrs) × Rs. 5/hr 

= 
− Rs. 1,560 
⇒ LEV/LUV_{(G)M} 
= 
− Rs. 1,560 
[Adv] 
• Women 
= 
({ 

× 800 hrs − 1,680 hrs) × Rs. 4/hr} 



= 
({2.04 × 800 hrs} − 1,680 hrs) × Rs. 4/hr 

= 
({1,632 hrs − 1,680 hrs) × Rs. 4/hr 

= 
(− 48 hrs) × Rs. 4/hr 

= 
− Rs. 192 
⇒ LEV/LUV_{(G)W} 
= 
− Rs. 192 
[Adv] 
• Boys 
= 
({ 

× 1,600 hrs − 2,940 hrs) × Rs. 3/hr} 



= 
({2.04 × 1,600 hrs} − 2,940 hrs) × Rs. 3/hr 

= 
({3,264 hrs − 2,940 hrs) × Rs. 3/hr 

= 
(+ 324 hrs) × Rs. 3/hr 

= 
+ Rs. 972 
⇒ LEV/LUV_{(G)B} 
= 
+ Rs. 972 
[Fav] 


Total Labour/Labor Efficiency/Usage Variance ⇒ TLEV/TLUV_{(G)} 
= 
− 780 
[Adv] 
• Labour/Labor (Net) Efficiency/Usage Variance [LEV/LUV_{(N)}]
Using, LEV/LUV_{(N)Lab} 
= 
({ 

× ST_{Lab}} − AT_{(N)Lab}) × SR_{Lab} 


Labour/Labor Efficiency/Usage Variance due to the labourers/laborers who are
• Men 
= 
({ 

× 1,000 hrs − 2,212 hrs) × Rs. 5/hr} 



= 
({2.04 × 1,000 hrs} − 2,212 hrs) × Rs. 5/hr 

= 
({2,040 hrs − 2,212 hrs) × Rs. 5/hr 

= 
(− 172 hrs) × Rs. 5/hr 

= 
− Rs. 860 
⇒ LEV/LUV_{(N)M} 
= 
− Rs. 860 
[Adv] 
• Women 
= 
({ 

× 800 hrs − 1,580 hrs) × Rs. 4/hr} 



= 
({2.04 × 800 hrs} − 1,580 hrs) × Rs. 4/hr 

= 
({1,632 hrs − 1,580 hrs) × Rs. 4/hr 

= 
(+ 52 hrs) × Rs. 4/hr 

= 
+ Rs. 208 
⇒ LEV/LUV_{(N)W} 
= 
+ Rs. 208 
[Fav] 
• Boys 
= 
({ 

× 1,600 hrs − 2,940 hrs) × Rs. 3/hr} 



= 
({2.04 × 1,600 hrs} − 2,940 hrs) × Rs. 3/hr 

= 
({3,264 hrs − 2,940 hrs) × Rs. 3/hr 

= 
(+ 324 hrs) × Rs. 3/hr 

= 
+ Rs. 972 
⇒ LEV/LUV_{(N)B} 
= 
+ Rs. 972 
[Fav] 


Total Labour/Labor Efficiency/Usage Variance ⇒ TLEV/TLUV_{(N)} 
= 
+ Rs. 320 
[Fav] 
• Labour/Labor Idle Time Variance [LITV]
LITV = − (AT_{(Id)} × SR)
Using, LITV = − (AT_{(Id)Lab} × SR_{Lab})
Labour/Labor Idle Time Variance due to labour/labor types who are
• Men 
= 
− (140 hrs × Rs. 5/hr) 

= 
− Rs. 700 
⇒ LITV_{M} 
= 
− Rs. 700 
[Adv] 
• Women 
= 
− (100 hrs × Rs. 4/hr) 

= 
− Rs. 400 
⇒ LITV_{W} 
= 
− Rs. 400 
[Adv] 
• Boys 
= 
− (0 hrs × Rs. 3/hr) 

= 
0 
⇒ LITV_{B} 
= 
Nil 
[None] 


Total Labour/Labor Idle Time Variance ⇒ TLITV 
= 
− Rs. 1,100 
[Adv] 
• Labour/Labor Mix/GangComposition Variance [LMV/GCV]
LMV/GCV 
= 
({ 

× ST} − AT_{(N)}) × SR 

Using, LMV/GCV_{Lab} 
= 
({ 

× ST_{Lab}} − AT_{(N)Lab}) × SR_{Lab} 

Labour/Labor Mix or Gang Composition Variance due to labourers/laborers who are
• Men 
= 
({ 

× 1,000 hrs} − 2,212 hrs) × Rs. 5/hr 


= 
({1.98 × 1,000 hrs) − 2,212 hrs) × Rs. 5/hr 

= 
(1,980 hrs − 2,212 hrs) × Rs. 5/hr 

= 
(− 232 hrs) × Rs. 5/hr 

= 
− Rs. 1,160 
⇒ LMV/GCV_{M} 
= 
− Rs. 1,160 
[Adv] 
• Women 
= 
({ 

× 800 hrs} − 1,580 hrs) × Rs. 4/hr 


= 
({1.98 × 800 hrs) − 1,580 hrs) × Rs. 4/hr 

= 
(1,584 hrs − 1,580 hrs) × Rs. 4/hr 

= 
(+ 4 hrs) × Rs. 4/hr 

= 
+ Rs. 16 
⇒ LMV/GCV_{W} 
= 
+ Rs. 16 
[Fav] 
• Boys 
= 



− 2,940 hrs) × Rs. 3/hr 

= 
({1.98 × 1,600 hrs) − 2,940 hrs) × Rs. 3/hr 

= 
(3,168 hrs − 2,940 hrs) × Rs. 3/hr 

= 
(+ 228 hrs) × Rs. 3/hr 

= 
+ Rs. 684 
⇒ LMV/GCV_{B} 
= 
+ Rs. 684 
[Fav] 


Total Labour Mix or Gang Composition Variance ⇒ TLMV/TGCV 
= 
− Rs. 460 
[Adv] 
• Labour/Labor Yield/SubEfficiency/SubUsage Variance [LYV/LSEV/LSUV]
Therefore, total labour/labor yield Variance,
⇒ TLYV/TLSEV/TLSUV 
= 
(10,200 units − { 

× 5,000 units} ) × 
Rs. 2.60/unit 



= 
(10,200 units − {1.98 × 5,000 units} ) × Rs. 2.60/unit 

= 
(10,200 units − 9,900 units) × Rs. 2.60/unit 

= 
(+ 300 units) × Rs. 2.60/unit 

= 
+ Rs. 780 [Pos or Fav] 

TLEV/TLUV_{(N)} + TLITV 
= 
(+ 320) + (− Rs. 1,100) 

= 
(− 780) 

= 
TLEV/TLUV_{(G)} → TRUE 
TLRPV + TLEV/TLUV_{(N)} + TLITV 
= 
(− Rs. 672) + (+ 320) + (− Rs. 1,100) 

= 
(− 1,452) 

= 
TLCV → TRUE 
TLMV/TGCV + TLYV/TLSEV/TLSUV 
= 
(− Rs. 460) + (+ Rs. 780) 

= 
(+ Rs. 320) 

= 
TLUV/TLSEV_{(N)} → TRUE 
TLRPV + TLMV/TGCV + TLYV/TLSEV/TLSUV_{(N)} + TLITV 
= 
(− Rs. 672) + (− Rs. 460) + (+ 780) + (− 1,100) 

= 
(− 1,452) 

= 
TLCV → TRUE 
Wish to avoid approximation errors!!!
Consider as many places after the decimal as possible. The more places you consider, the lesser would be chance for error. This should not make you go crazily writing down numbers with long digits after the decimal. It would not be needed. One another method is to use fractions without writing them down in their decimal form, till you arrive at the last step. Say use Rs. 115/9 in place of Rs. 12.78 which would reduce the need for approximation to the greatest possible extent.
Caution
How does an amount of Rs. 123.45398723992873623212983439272 (Or) Rs. 143/7 sound......
Please, don't write your final figures as fractions or with more than two digits after the decimal. We are not in the science lab. We are talking of money.


