S1: In standard costing, the 'Labour Efficiency Variance' is calculated as (Standard Hours for Actual Production - Actual Hours Worked) x Standard Rate. S2: If the actual hours worked are less than the standard hours, the variance is favorable. Which statement(s) is/are correct? MCQ with Answer and Explanation
S1: In standard costing, the 'Labour Efficiency Variance' is calculated as (Standard Hours for Actual Production - Actual Hours Worked) x Standard Rate. S2: If the actual hours worked are less than the standard hours, the variance is favorable. Which statement(s) is/are correct?
A. S2 only
B. S1 only
C. Both S1 and S2
D. Neither S1 nor S2
Answer: Option C
Solution (By JKSSB Mock Tests)
Both statements are correct. The formula for Labour Efficiency Variance is (SH - AH) x SR. If AH < SH, the result is positive, indicating a favorable variance (less time taken than standard).
Explanation:
Margin of Safety = Actual Sales - BEP Sales. 20% of 5,00,000 = 1,00,000. Therefore, BEP Sales = Actual Sales - MOS = 5,00,000 - 1,00,000 = ₹4,00,000.
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