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Question: Indira Industries produces only one article, the prime cost standards for which have been established as follows:
Materials – 5 kg. @ Rs.4.20 Rs.21
Labour = 2 hours @ Rs.3 Rs. 6
The production schedule for the month of April 2003 required completion of 5000 pieces. But the actual production was of 5120 pieces. Purchases for the month of April 2003 amounted to 30,000 kg. of material at the total invoice price of Rs. 1,35,000.
Production records for the month of April 2003 showed the following actual results:
Material used: 25,700 kgs.
Direct Labour 15.150 hours Rs.48,480
Calculate the appropriate material and labour variances.
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