Labour/Labor - Standard/Actual/Budgeted Input/Output/Time/Rate/Cost

Material Variances

Labour/Labor Cost & Variance

Labour/Labor Variance

Labour/Labor Variance implies the variances in cost incurred on Labour/Labor used for obtaining the output.

Labour/Labor Cost

It is the cost of labor used in the manufacture of a product or service.

In general

Value = Quantity × Price

For Labour/Labor

Cost of Labour/Labor

=	Labour/Labor Time × Rate per unit time payable to labour/labor

We can say that Labour/Labor cost is influenced by two factors,

The time for which labour/labor is engaged
The wage rate payable to labour/labor.

Illustration for explanation

Consider the following data relating to the standard costs and the actual costs incurred in relation to the manufacture of a product. This data is referred to in all the explanations below

	Standard			Actual
	Standard			Total				Idle (Abnormal)		Productive (Normal)
	ST	SR	SC	AT	AR	AC	SC(AT)	IT	SC(IT)	PT	SC(PT)
Skilled Semi-Skilled Unskilled	200 400 150	20 15 10	4,000 6,000 1,500	240 500 220	22 14 12	5,280 7,000 2,640	4,800 7,500 2,200	24 50 22	528 700 264	216 450 198	4,320 6,750 1,980
Total	750		11,500		960	14,920	14,500	96	1,450	864	13,050
Output	7,500 SO			7,200 AO

Where

ST (Standard Time),
AT (Actual Time)
IT (Idle Time)
PT (Productive Time)
are in time units (hrs here)
SR (Standard Rate) and
AR (Actual Rate)
are in monetary value per unit time (per hr here)
SC (Standard Cost),
AC (Actual Cost)
SC(AT) (Standard Cost of Actual Time)
SC(IT) (Standard Cost of Idle Time)
SC(PT) (Standard Cost of Productive Time)
are in monetary values
SO (Standard Output),
AO (Actual Output)
are in units in which output is expressed

Note

The Rate in total row is derived using the relation
Value
Time
Rate/hr (standard)
=
11,500
750

=
46
3
or 15.33
Rate/hr (actual)
=
14,920
960

=
373
24
or 15.542
If you have to use this in calculations, use fractional value if it is simple. Otherwise use the decimal number with substantial number of digits after the decimal.

Identities

The data in the above table while being interpreted will be addressed as below.

	Standard			Actual
	Standard			Total				Idle (Abnormal)		Productive (Normal)
	ST	SR	SC	AT	AR	AC	SC(AT)	IT	SC(IT)	PT	SC(PT)
Skilled Semi-Skilled Unskilled	ST_sk ST_ss ST_un	SR_sk SR_ss SR_un	SC_sk SC_ss SC_un	AT_sk AT_ss AT_un	AR_sk AR_ss AR_un	AC_sk AC_ss AC_un	SC(AT)_sk SC(AT)_ss SC(AT)_un	IT_sk IT_ss IT_un	SC(IT)_sk SC(IT)_ss SC(IT)_un	PT_sk PT_ss PT_un	SC(PT)_sk SC(PT)_ss SC(PT)_un
Total	ST_Mix	SR_Mix	SC_Mix	AT_Mix	AR_Mix	AC_Mix	SC(AT)_Mix	IT_Mix	SC(IT)_Mix	PT_Mix	SC(PT)_Mix
Output	SO			AO

We use the abbreviated form of labour/labor type name as subscript for identifying each labour/labor type separately and the word Mix to identify all the materials together.

ST_sk for standard time of labour/labor of skilled labour/labor, AT_Mix for total time of actual mix (all the labour/labor types together) etc.

Gang Composition - Labour/Labor Mix

We may use various types of labour/labor in the product manufacturing process. We use the terms Labour/Labor Mix or Gang Composition to indicate that there are more than one kind of labourers/laborers involved in the production process.

Time of Mix indicates time of all types of labour/labor taken together.
Cost of Mix indicates cost of all types of labour/labor taken together.
Rate of Mix indicates the weighted average rate of all types of labor/labour rates taking time as weights.

Some examples we come across in problem solving on labour/labor variances:

A production process needs some skilled, some semi-skilled and some un-skilled workers. We consider these three to be different types of labour/labor which would be remunerated with varying rates of pay.
A production process employs men, women and boys as labourers/laborers. We consider each of them to be a particular type. It is obvious that each would be remunerated with varying rates of pay.

If the rate of pay planned to be paid (standard) for all the different types of labour/labor is the same, and the rate paid to all is the same, such a classification would not be of much use.

Standards

Standard

A basis for comparison
The ideal in terms of which something can be judged
a reference point against which other things can be evaluated
criterion

The following terms involving standards are relevant to this topic.

Standard (Labour/Labor) Time ~ ST
The Labour/Labor time of a particular type of labour/labor required for manufacturing the product.
It may be expressed for one or more units output.
1. Standard Labour/Labor time required for producing 1 unit is 15 minutes.
2. Standard output is 120 units and the Labour/Labor time required for the same is 1,800 minutes or 30 hours.
- Standard Labor/Labour Time ~ ST_Lab
  The time relating to each type of labour/labor
- Standard Time of Mix
  The total time of all types of labour/labor together
  Standard Time of Mix
  ST_Mix = ΣST_Lab
  Sum of the Standard Times of Individual Labour/Labor types
  Where there is only one type of labour/labor ST_Mix = ST_Lab.
From the data in the illustration
ST_sk = 200 hrs
ST_ss = 400 hrs
ST_us = 150 hrs
ST_Mix = 750 hrs
Standard Input
The total labour/labor time of all types of laborers as per standards.
SI = ΣST_Lab
= ST_Mix
From the data in the illustration
SI = ST_Mix
= 750 hrs
Standard Mix Ratio or (Standard Gang Composition Ratio)
Where there are two or more types of labour/labor involved in the production process, Standard Mix Ratio or Gang Composition Ratio indicates the ratio in which the times of labour/labor types are to be combined, if the production process is carried on according to plans.
This ratio can be for labour/labor times or costs.
Standard Time Mix Ratio
STMR = ST_Lab1 : ST_Lab2 : ...
Ratio of Standard Times of Individual Labour/Labor types
This ratio is also identified as Gang Composition Ratio.
Standard Cost Mix Ratio
SCMR = SC_Lab1 : SC_Lab2 : ...
Or = ST_Lab1 × SR_Lab1 : ST_Lab2 × SR_Lab2 : ...
Ratio of Standard Costs of Individual Labour/Labor types
From the data in the illustration,
STMR = ST_sk : ST_ss : ST_us
= 200 hrs : 400 hrs : 150 hrs
= 4 : 8 : 3
SCMR = SC_sk : SC_ss : SC_us
= 4,000 : 6,000 : 1,500
= 8 : 12 : 3
Standard Rate of Pay
The rate of wages to be paid to the Labourers/Laborers used in the production process.
- Standard Rate of Pay of Labour/Labor ~ SR_Lab
  The Rate of Pay for each labour/labor type
- Standard Rate of Pay of Mix ~ SR_Mix
  The weighted average standard rate of all labour/labor types taking times as weights.
  SR_Mix =
  ST_Lab1 × SR_Lab1 + ST_Lab2 × SR_Lab2 + ...
  ST_Lab1 + ST_Lab2 + ...
  =
  Σ(ST_Lab × SR_Lab)
  ΣST_Lab
  =
  ΣSC_Lab
  ΣST_Lab
  =
  SC_Mix
  ST_Mix
  Where there is only one type of labour/labor SR_Mix = SR_Lab.
From the data in the illustration
SR_sk = 20/hr
SR_ss = 15/hr
SR_us = 10/hr
SR_Mix =
11,500
750 hrs
=
46
3
/ hr or 15.542/hr

Standard Cost of Labour/Labor

The cost of labour/labor to be incurred on manufacturing the standard output.

It is the cost for standard labour/labor time taken at the standard rate of pay.

ST × SR

Standard Labor/Labour Time × Standard Rate of Pay

Standard Cost of Labour/Labor
The cost of each labour/labor type distinctly
SC_Lab = ST_Lab × SR_Lab
Standard Cost of Mix
The standard cost of all the labour/labor types together
SC_Mix = ST_Mix × SR_Mix
Standard Time of Mix × Standard Rate of Mix
Or = ΣSC_Lab
Sum of the Standard Costs of Individual Labour/Labor Types
Where there is only one labour/labor type SC_Mix = SC_Lab.

From the data in the illustration

SC_sk

ST_sk × SR_sk

200 hrs × 20/hr

4,000

SC_ss

ST_ss × SR_ss

400 hrs × 15/hr

6,000

SC_us

ST_us × SR_us

150 hrs × 10/hr

1,500

SC_Mix

11,500

SC_Mix

ST_Mix × SR_Mix

750 hrs ×

/hr

11,500

Standard Output/Production
It is the output that is achieved using the standard Labour/Labor time.
From the data in the illustration
SO = 7,500 units
Standard Cost for Unit Output/Yield
The standard labor/labour cost incurred per unit output
=
Standard Cost
Standard Output
⇒ SC/UO =
SC
SO
SC/UO ≡ SC/UY. Output is also addressed to as yield.
- for each Labour/Labor Type separately
  SC/UO_Lab =
  SC_Lab
  SO
- for all Labour/Labor Types together
  The standard cost incurred per unit output over all the labour/labor types taken together.
  SC/UO_Mix =
  SC_Mix
  SO
From the data in the illustration,
SC/UO_sk =
SC_sk
SO
=
4,000
7,500 units
=
8
25
/unit
SC/UO_ss =
SC_ss
SO
=
6,000
7,500 units
= 0.8/unit
SC/UO_us =
SC_us
SO
=
1,500
7,500 units
= 0.2/unit
SC/UO_Mix =
SC_Mix
SO
=
11,500
7,500 units
=
23
15
/unit

Actuals

The term actual relates to the data pertaining to the actual activity. The following terms involving actuals are relevant to this topic.

Where there is a loss of labor/labour time on account of abnormal reasons, generally called idle time or more specifically abnormal idle time, we segregate the actual data to reflect the loss of time.

Actual Time = Total Time
Idle Time = Time Lost on account of abnormal reasons
Productive Time = Effective Time Utilised

Actual Time (of Labour/Labor) ~ AT
The Labour/Labor time actually worked during the process of manufacturing the product.
It may be expressed in terms for one or more units output.
1. Actual Labour/Labor time worked in producing 1 unit is 24 minutes.
2. Actual output is 200 units and the Labour/Labor time worked for the same is 3,840 minutes or 64 hours.
- Actual Time of Labor/Labour ~ AT_Lab
  The time of each type of labour/labor
- Actual Time of Mix ~ AT_Mix
  The time of all the labor/labour types together
  AT_Mix = ΣAT_Lab
  Sum of the Actual Times of Individual Labour/Labor Types
  Where there is only one type of labour/labor AT_Mix = AT_Lab.
From the data in the illustration
AT_sk = 240 hrs
AT_ss = 500 hrs
AT_us = 220 hrs
AT_Mix = 960 hrs
Idle Time
The Labour/Labor time actually lost on account of abnormal reasons. This represents the labour/labor time whose cost should be treated as abnormal cost and has to be eliminated from the cost of the output.
- Idle Time of Labor/Labour ~ IT_Lab
  The idle time loss relating to each type of labour/labor
- Idle Time of Mix
  The idle time relating to all the labor/labour types together
  IT_Mix = ΣIT_Lab
  Sum of the Idle Times of Individual Labour/Labor Types
  Where there is only one type of labour/labor IT_Mix = IT_Lab.
From the data in the illustration
IT_sk = 24 hrs
IT_ss = 50 hrs
IT_us = 22 hrs
IT_Mix = 96 hrs

Productive Time

The Labour/Labor time that was actually useful for the process of manufacturing the product after eliminating the idle time.

Productive Time of Labor/Labour ~ PT_Lab
The Productive time of each type of labour/labor type
It is the net time remaining after deducting the idle time from the actual time.
PT_Lab = AT_Lab − IT_Lab
Actual Time for a labour/labor type − Idle Time the labour/labor type
Productive Time of Mix
The productive time over all the labor/labour types together
PT_Mix = ΣPT_Lab
Sum of the Productive Times of Individual Labour/Labor Types
Or = AT_Mix − IT_Mix
Actual Time of Mix − Idle Time of Mix
From the data in the illustration
PT_Mix = PT_sk + PT_ss + PT_us
= 216 hrs + 450 hrs + 198 hrs
= 864 hrs
Where there is only one type of labour/labor PT_Mix = PT_Lab.

From the data in the illustration

PT_sk	=	AT_sk − IT_sk
	=	240 hrs − 24 hrs	=	216 hrs
PT_ss	=	AT_ss − IT_ss
	=	500 hrs − 50 hrs	=	450 hrs
PT_us	=	AT_us − IT_us
	=	220 hrs − 22 hrs	=	196 hrs
PT_Mix			=	865 hrs
PT_Mix	=	AT_Mix − IT_Mix
	=	960 hrs − 96 hrs	=	864 hrs

Where there are no losses

Where there is no idle time loss, all of actual time is productive time.

PT_sk = AT_sk
PT_ss = AT_ss
PT_us = AT_us
PT_Mix = AT_Mix

Actual Input
The productive time of labour/labor actually worked.
AI = ΣPT_Lab
= PT_Mix
From the data in the illustration
AI = PT_Mix
= 864 hrs
Where there are no losses
Where there is no idle time loss, the total time is productive time.
AI = PT_Mix = AT_Mix

Actual Mix Ratio or (Actual Gang-Composition Ratio)

Where there are two or more types of Labourers/Laborers involved in the production process, Actual Mix Ratio or Gang-Composition Ratio indicates the ratio of the productive time for which the Labour/Labor types are actually employed.

It is the ratio of the actual productive labour/labor time of various labour/labor types making up the mix/gang.

This ratio can be for labour/labor times or costs.

Actual Time Mix Ratio

ATMR

AT_Lab1 : AT_Lab2 : ...

Ratio of Actual Times of Individual Labour/Labor types

This ratio is also identified as Gang Composition Ratio.

Actual Cost Mix Ratio

ACMR	=	PC_Lab1 : PC_Lab2 : ...
Or	=	PT_Lab1 × SR_Lab1 : PT_Lab2 × SR_Lab2 : ...
		Ratio of Actual (Productive time) Costs of Individual Labour/Labor types

From the data in the illustration,

ATMR	=	PT_sk : PT_ss : PT_us
	=	216 hrs : 450 hrs : 198 hrs
	=	12 : 25 : 11
ACMR	=	PC_sk : PC_ss : PC_us
	=	PT_sk × AR_sk : PT_ss × AR_ss : PT_us × AR_us
	=	216 hrs × 22/hr : 450 hrs × 14/hr : 196 hrs × 12/hr
	=	4,752 : 6,300 : 2,352
	=	132 : 175 : 66

Actual Rate of Pay
The rate of wages actually paid to the labourers/laborers employed.
- Actual Rate of Labour/Labor ~ AR_Lab
  The rate paid/payable to each distinct labour/labor type
- Actual Rate of Mix ~ AR_Mix
  The weighted average actual rate of all types of labour/labor types taking times as weights.
  AR_Mix =
  AT_Lab1 × AR_Lab1 + AT_Lab2 × AR_Lab2 + ...
  AT_Lab1 + AT_Lab2 + ...
  =
  Σ(AT_Lab × AR_Lab)
  ΣAT_Lab
  =
  ΣAC_Lab
  ΣAT_Lab
  =
  AC_Mix
  AT_Mix
  Where there is only one labour/labor type AR_Mix = AR_Lab.
From the data in the illustration
AR_sk = 22/hr
AR_ss = 14/hr
AR_us = 12/hr
AR_Mix =
AC_Mix
AT_Mix
=
14,920
960 hrs
=
373
24
/hr (Or) 15.5417/hr

Actual Cost

The actual cost of labour/labor incurred for employing labour/labor for the actual time for which wages are payable.

It is the value of actual labour/labor time valued at the actual rate of pay.

AT × AR

Actual Time × Actual Rate

Actual Cost for Labor/Labour type
The cost of each labor/labour type distinctly
AC_Lab = AT_Lab × AR_Lab
Actual Cost of Mix
The actual cost for all labour/labor types together
AC_Mix = AT_Mix × AR_Mix
Actual Time of Mix × Actual Rate of Mix
Or = ΣAC_Lab
Sum of the Actual Costs of Individual Labour/Labor types
Where there is only one type of labour/labor AC_Mix = AC_Lab

From the data in the illustration

AC_sk

AT_sk × AR_sk

240 hrs × 22/hr

5,280

AC_ss

AT_ss × AR_ss

500 hrs × 14/hr

7,000

AC_us

AT_us × AR_us

220 hrs × 12/hr

2,640

AC_Mix

14,920

AC_Mix

AT_Mix × AR_Mix

960 hrs ×

373

/hr

14,920

Actual Cost of Productive Labour/Labor Time
The actual cost of labour/labor incurred for the productive time for which the labour/labor is utilised.
It is the value of Productive labour/labor time valued at the actual rate of pay.
Productive Cost
= Productive Time × Actual Rate of Pay
⇒ PC = PT × AR
The value of actual (total) cost of labour/labor (AC) is used in identifying cost and price variances. Productive labour/labor cost is not used anywhere in finding variances. Thus its calculation is not considered.
Actual Output ~ AO
It is the output that is actually achieved using the actual Labour/Labor time.
From the data in the illustration,
AO = 7,200 units
Standard Cost of Idle Labour/Labor Time
The standard cost of idle labor/labour time i.e. labour/labor time lost on account of abnormal reasons.
It is arrived at by valuing the idle labour/labor time at the standard rate.
Standard Cost of Idle Time
= Idle Time × Standard Rate of Pay
⇒ SC(IT) = IT × SR
Where more than one type of labour/labor is used for producing the output, we recognise or identify
- for each labour/labor type separately ~ SC(IT)_Lab
  The cost of each labor/labour type separately by valuing the idle time lost at the standard rate of pay as Standard Cost of Idle Time
  From the data in the illustration,
  SC(IT)_sk = IT_sk × SR_sk
  = 24 hrs × 20/hr
  = 480
  SC(IT)_ss = IT_ss × SR_ss
  = 50 hrs × 15/hr
  = 750
  SC(IT)_us = IT_us × SR_us
  = 22 hrs × 10/hr
  = 220
- for all labour/labor types together ~ SC(IT)_Mix
  The cost of all the labor/labour type together as Standard Cost of Idle Time of Mix
  Standard Cost of Idle Time of Mix
  = Sum of the Standard Costs of Idle Time of Individual Labour/Labor types
  ⇒ SC(IT)_Mix = SC(IT)₁ + SC(IT)₂ + ...
  From the data in the illustration,
  SC(IT)_Mix = SC(IT)_sk + SC(IT)_se + SC(IT)_us
  = 480 + 750 + 220
  = 1,450
  SC(IT)_Mix ≠ IT_Mix × SR_Mix
  The formula IT_Mix × SR_Mix would not give the SC(IT)_Mix.
  This is for the reason that SR_Mix is the weighted average of Standard Rates taking standard times (ST) as weights and the present calculation considers actual times (AT).
Standard Cost of Productive Labour/Labor Time
The standard cost of productive labor/labour time utilised.
It is arrived at by valuing the productive labour/labor time at the standard rate.
Standard Cost of Productive Time
= Productive Time × Standard Rate of Pay
⇒ SC(PT) = PT × SR
Where more than one type of labour/labor is used for producing the output, we recognise or identify
- for each labour/labor type separately ~ SC(PT)_Lab
  The cost of each labor/labour type separately by valuing the total time utilised at the standard rate of pay as Standard Cost of Productive Time
  From the data in the illustration,
  SC(PT)_sk = PT_sk × SR_sk
  = 216 hrs × 20/hr
  = 4,320
  SC(PT)_ss = PT_ss × SR_ss
  = 450 hrs × 15/hr
  = 6,750
  SC(PT)_us = PT_us × SR_us
  = 198 hrs × 10/hr
  = 1,980
- for all labour/labor types together ~ SC(PT)_Mix
  The cost of all the labor/labour type together as Standard Cost of Productive Time of Mix
  Standard Cost of Productive Time of Mix
  = Sum of the Standard Costs of Productive Time of Individual Labour/Labor types
  ⇒ SC(PT)_Mix = SC(PT)₁ + SC(PT)₂ + ...
  From the data in the illustration,
  SC(PT)_Mix = SC(PT)_sk + SC(PT)_se + SC(PT)_us
  = 4,320 + 6,750 + 1,980
  = 13,050
  SC(PT)_Mix ≠ PT_Mix × SR_Mix
  The formula PT_Mix × SR_Mix would not give the SC(PT)_Mix.
  This is for the reason that SR_Mix is the weighted average of Standard Rates taking standard times (ST) as weights and the present calculation considers actual times (AT).

Budget/Budgeted

Budget

a depiction of a future activity in quantitative terms.

Production Time Budget
A Production Time Budget indicates the time required for achieving a planned output over a future period or production process.
Cash Budget
A cash budget indicates the inflow and outflow of cash over a certain future period.
Labour/Labor Cost Budget
A labour cost budget indicates the expenditure on account of labour/labor that is to be incurred over the budget period.

Budgeted

relates to a budget

By the term Budgeted Data in this topic, we mean the data pertaining to a specified budget indicating a level of activity that has been planned to be achieved.

The following terms involving budgets are relevant to this topic.

Budgeted Output/Production
It is the output that is planned to be achieved during a period through the production process.
Budgeted Labour/Labor Time
It is the standard Labour/Labor time required to be input into the production process for achieving the budgeted output.
Budgeted Labour/Labor Time
BT = ST/UO × BO
Standard Labour/Labor Time for unit output × Budgeted Output
Budgeted Rate of Pay
Budgets are prepared as per standards. As such Budgeted Rate is nothing but standard rate.
⇒ BR = SR
Budgeted Labour/Labor Cost
The cost of Labour/Labor to be incurred for manufacturing the budgeted output. It is the value of budgeted Labour/Labor time taken at the standard rate of pay.
Budgeted Labour/Labor Cost
BC = BT × SR
Budgeted Labour/Labor Time × Standard Rate

Budgeted vs Standard

Budgeted indicates a specific level of activity and Standard may indicate any level of activity.

Examples

Budgeted Output is the output that is planned to be achieved by the organisation in a given period/process and Standard Output is that output for which the standards are expressed.
Standard Cost gives an idea of how much each unit of the product should cost under normal circumstances. Budget Cost gives an idea of the cost that should be incurred for bringing out the budget quantity of output (over a certain period or in a certain process) under normal circumstances.

Sometimes, we use the terms Budgeted and Standard synonymously, but they need not be the same.

For analysing variances, we need standards

In analysing variances we need the data relating to the standards, i.e. data relating to the standard quantity (SQ), price (SP) and output (SO).

Budgets are always as per the standard

It should be noted that the budgeted data is always based on standards. Standards are fixed for each unit of production and budgeted data is relevant to a particular production level. Standards may be expressed for any production level (1 unit, 2 units, 10 units, ...).

Since budgeted data is standard data for a particular production level we do not need separate data for the standard when the budgeted data is known.

SO = BO

	Standard			Budgeted			Actual
	ST	SR	SC	BT	BR	BC	AT	AR	AC
Men	120	8	960	120	8	960	124	8.5	1,054
Output	14 SO			14 BO			14 AO

The actual output, the standard output and the budgeted output are the same i.e. 14 units.

SO ≠ BO

The standard output and the budgeted output are not the same.

	Standard			Budgeted			Actual
	ST	SR	SC	BT	BR	BC	AT	AR	AC
Skilled Workers	1,200	8	9,600	3,000	8	24,000	720	9	6,480
Output	10 SO			15 BO			20 AO

The actual output (20 units) is not equal to the standard output (10 units) as well as the budgeted output (15 units).

Author : The Edifier

Page L2

SCMR	=	SC_Lab1 : SC_Lab2 : ...
Or	=	ST_Lab1 × SR_Lab1 : ST_Lab2 × SR_Lab2 : ...
		Ratio of Standard Costs of Individual Labour/Labor types

STMR	=	ST_sk : ST_ss : ST_us
	=	200 hrs : 400 hrs : 150 hrs
	=	4 : 8 : 3
SCMR	=	SC_sk : SC_ss : SC_us
	=	4,000 : 6,000 : 1,500
	=	8 : 12 : 3

SC_Mix	=	ST_Mix × SR_Mix Standard Time of Mix × Standard Rate of Mix
Or	=	ΣSC_Lab Sum of the Standard Costs of Individual Labour/Labor Types

PT_Mix	=	ΣPT_Lab Sum of the Productive Times of Individual Labour/Labor Types
Or	=	AT_Mix − IT_Mix Actual Time of Mix − Idle Time of Mix

PT_Mix	=	PT_sk + PT_ss + PT_us
	=	216 hrs + 450 hrs + 198 hrs
	=	864 hrs

AC_Mix	=	AT_Mix × AR_Mix Actual Time of Mix × Actual Rate of Mix
Or	=	ΣAC_Lab Sum of the Actual Costs of Individual Labour/Labor types

SC(IT)_sk	=	IT_sk × SR_sk
	=	24 hrs × 20/hr
	=	480
SC(IT)_ss	=	IT_ss × SR_ss
	=	50 hrs × 15/hr
	=	750
SC(IT)_us	=	IT_us × SR_us
	=	22 hrs × 10/hr
	=	220

SC(IT)_Mix	=	SC(IT)_sk + SC(IT)_se + SC(IT)_us
	=	480 + 750 + 220
	=	1,450

SC(PT)_sk	=	PT_sk × SR_sk
	=	216 hrs × 20/hr
	=	4,320
SC(PT)_ss	=	PT_ss × SR_ss
	=	450 hrs × 15/hr
	=	6,750
SC(PT)_us	=	PT_us × SR_us
	=	198 hrs × 10/hr
	=	1,980

SC(PT)_Mix	=	SC(PT)_sk + SC(PT)_se + SC(PT)_us
	=	4,320 + 6,750 + 1,980
	=	13,050

SI	=	ΣST_Lab
SI	=	ST_Mix

Labour/Labor - Standard/Actual/Budgeted Input/Output/Time/Rate/Cost

Labour/Labor Cost & Variance

Labour/Labor Variance

Labour/Labor Cost

Illustration for explanation

Where

Note

Identities

Gang Composition - Labour/Labor Mix

Standards

Standard

Standard (Labour/Labor) Time ~ ST

Standard Labor/Labour Time ~ STLab

Standard Time of Mix

Standard Input

Standard Mix Ratio or (Standard Gang Composition Ratio)

Standard Time Mix Ratio

Standard Cost Mix Ratio

Standard Rate of Pay

Standard Rate of Pay of Labour/Labor ~ SRLab

Standard Rate of Pay of Mix ~ SRMix

Standard Cost of Labour/Labor

Standard Cost of Labour/Labor

Standard Cost of Mix

Standard Output/Production

Standard Cost for Unit Output/Yield

for each Labour/Labor Type separately

for all Labour/Labor Types together

Actuals

Actual Time (of Labour/Labor) ~ AT

Actual Time of Labor/Labour ~ ATLab

Actual Time of Mix ~ ATMix

Idle Time

Idle Time of Labor/Labour ~ ITLab

Idle Time of Mix

Productive Time

Productive Time of Labor/Labour ~ PTLab

Productive Time of Mix

Where there are no losses

Actual Input

Where there are no losses

Actual Mix Ratio or (Actual Gang-Composition Ratio)

Actual Time Mix Ratio

Actual Cost Mix Ratio

Actual Rate of Pay

Actual Rate of Labour/Labor ~ ARLab

Actual Rate of Mix ~ ARMix

Actual Cost

Actual Cost for Labor/Labour type

Actual Cost of Mix

Actual Cost of Productive Labour/Labor Time

Actual Output ~ AO

Standard Cost of Idle Labour/Labor Time

for each labour/labor type separately ~ SC(IT)Lab

for all labour/labor types together ~ SC(IT)Mix

SC(IT)Mix ≠ ITMix × SRMix

Standard Cost of Productive Labour/Labor Time

for each labour/labor type separately ~ SC(PT)Lab

for all labour/labor types together ~ SC(PT)Mix

SC(PT)Mix ≠ PTMix × SRMix

Budget/Budgeted

Budget

Production Time Budget

Cash Budget

Labour/Labor Cost Budget

Budgeted

Budgeted Output/Production

Budgeted Labour/Labor Time

Budgeted Rate of Pay

Budgeted Labour/Labor Cost

Budgeted vs Standard

Examples

For analysing variances, we need standards

Budgets are always as per the standard

SO = BO

SO ≠ BO

Standard Labor/Labour Time ~ ST_Lab

Standard Rate of Pay of Labour/Labor ~ SR_Lab

Standard Rate of Pay of Mix ~ SR_Mix

Actual Time of Labor/Labour ~ AT_Lab

Actual Time of Mix ~ AT_Mix

Idle Time of Labor/Labour ~ IT_Lab

Productive Time of Labor/Labour ~ PT_Lab

Actual Rate of Labour/Labor ~ AR_Lab

Actual Rate of Mix ~ AR_Mix

for each labour/labor type separately ~ SC(IT)_Lab

for all labour/labor types together ~ SC(IT)_Mix

SC(IT)_Mix ≠ IT_Mix × SR_Mix

for each labour/labor type separately ~ SC(PT)_Lab

for all labour/labor types together ~ SC(PT)_Mix

SC(PT)_Mix ≠ PT_Mix × SR_Mix