CMA Intermediate · Cost Accounting · Standard Costing and Variance Analysis
Standard labour mix for a batch at Coimbatore Pumps is 40 hours skilled at ₹50 and 60 hours unskilled at ₹30. Actual hours were 45 skilled and 55 unskilled. What is the labour mix variance?
The labour mix variance is ₹100 Adverse. In the standard mix the 100 hours cost ₹3,800, but the actual mix with more skilled labour cost ₹3,900 at standard rates, so the shift to costlier labour is adverse by ₹100.
- A₹100 AdverseCorrect
- B₹100 Favourable
- C₹200 Adverse
- D₹500 Adverse
Explanation
Standard cost of actual hours in standard mix = 40x50 + 60x30 = 3,800 for 100 hours. Actual mix at standard rates = 45x50 + 55x30 = 2,250 + 1,650 = 3,900. Mix variance = 3,800 - 3,900 = ₹100 Adverse.
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