Question: (a) Discuss the factors which should be considered when setting the standard labour cost of a product.
(b) Settah Ltd manufactures two different types of component in two production departments, a press shop and a fitting department. The budgeted production and standard labour costs for Period 5 were:
Throughout Period 5 there were 135 direct workers employed in the Press Shop and 145 in the Fitting Department. All employees in both departments attended and were paid for a 40 hour week in each of the four weeks in Period 5. However during the final week in the Fitting Department each employee was idle for 3 hours; the result of poor material scheduling.
Required: Calculate the appropriate direct wage variances for Period 5.