Page 184 - DCOM302_MANAGEMENT_ACCOUNTING

Unit 9: Variance Analysis

16,000 Notes
Unskilled = × 37,400 = 17,600 hrs
34,000
Labour Mix Variance =

Skilled = (11,000 – 9,000) 3 = 6000 (F)
Semi-skilled = (8,800 – 8,400) 1.50 = 600 (F)
Unskilled = (17,600 – 20,000) 1 = 2,400 (F)
Total Labour Mix Variance 4,200 (F)

Labour Sub-effi ciency Variance

It is one of the components of the labour effi ciency variance.
Labour Sub-efficiency Variance = Standard Rate (Standard Hours for Actual Output – Revised

Standard Hours)

Example: Using the data of above example, calculate the labour sub-effi ciency variance:
Solution:

Labour Sub-efficiency Variance = Standard Rate (Standard Hours for Actual Output – Revised

Standard Hours)
= (SH - RSH) SR
Skilled = (10,000 - 11,000) 3 = 3,000 (A)

Semi-skilled = (8,000 - 8,800) 1.50 = 1,200 (A)
Unskilled = (16,000 - 17,600) 1 = 1,600 (A)

Total Labour Sub-Efficiency Variance 5,800 (A)
Labour Yield Variance

It is considered to be as one of the components of labour efficiency variance. This is a variance in

between two different outputs of the enterprise viz. standard output for actual hours and actual
output.
This is a variance facilitates to study the deviation in between two different levels i.e. how many
number of outputs would be produced during the actual hours and how many number of actual
outputs were produced during the actual hours.
Labour Yield Variance = Standard Cost per unit (Actual Output – Standard Output in
Actual Hours)
OR
= Standard Cost per unit (Actual Yield in Units – Standard Yield
in Actual Hours)

If Actual output or Actual yield in units is greater than the standard yield in actual hours, it
means that the firm’s actual production in units is greater than the standard estimates nothing

but favourable to the business enterprise.

Example: A group of workers normally consists of 30 men, 15 women and 10 boys. They
are paid at standard hourly rates as under:

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