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Sir,
We have already calculated standard cost of labour per hour (i.e. Standard rate).
while at the time of calculating labour rate variance why do we divide actual hours paid by 0.95 instead of multiplying it with 12 directly?Thanks in advance
Dear John, I cannot post anything to this sub forum as well as post my question.
Ema: We don’t divide the hours by 0.95.
The staff have agreed to take a pay cut of 5% and so for every $95 they are actually paid, the standard cost would be $100.
So they are taking the total that was actually paid and dividing that by 0.95 to find out what they would have been paid at standard cost.
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