Total labour costs were £39,060 against a standard labour cost for the output of £36,000. The rate variance was £1,260 adverse, the efficiency variance £450 adverse and the idle time variance £1,350 adverse. What is the total labour variance and is the analysis consistent?
Answer and explanation
Correct answer: C. £3,060 adverse, and the three variances add up to it
- Step 1: Total labour variance = standard cost £36,000 − actual cost £39,060 = £3,060 adverse.
- Step 2: Rate £1,260 + efficiency £450 + idle time £1,350 = £3,060.
- Step 3: The analysis is complete and consistent.
Answer
£3,060 adverse, and the three variances add up to it.
Why not the others: The three variances total £3,060, not £2,700. Actual cost is higher than standard, so the total is adverse. All three variances increase total cost above the standard.
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