Question:
Model: Labour-cost variances
The direct labour strength of a section of an engineering factory is 100 workers, paid at the rate of Rs. 6 per day of 8 hours each. The normal production is 1,000 pieces per week of 48 hours. During a particular week, an order for 1,500 pieces was completed expending 7,650 hours made up of 6,300 hours at normal wages and 1,350 hours at overtime wages at double rate. The total wages came to Rs. 6,300.
Calculate the average labour cost per piece during the week and analyse the labour-cost variance for the work.