This chapter-wise practice test covers Chapter 13: Standard Costing - Test 2 for CA Intermediate Group 2 students preparing for the January 2027 examination attempt. It carries 50 marks across 25 questions in case scenarios and standalone practical MCQs with a time limit of 60 minutes and no negative marking.
25 questions across 1 chapter, 50 marks and 60 minutes in the timed paper. Every answer below is shown with the working behind it and the authority it rests on.
Law and standards used: ICAI Study Material for CA Intermediate Paper 4: Cost and Management Accounting (relevant for 2027 attempt).
Questions
25
Marks
50
Time limit
60 minutes
Attempt
January 2027
Group
Group 2
Law basis
ICAI Study Material for CA Intermediate Paper 4: Cost and Management Accounting (relevant for 2027 attempt)
Content as of
2026-11-10
Chapters covered
Chapter 13: Standard Costing (25 Q)
Questions, answers and explanations
Question 1 · 2 marks · Chapter 13: Standard Costing · medium
Scenario. Helios Precision Gears Ltd. manufactures transmission components for automobile manufacturers. Its production facility operates three shifts and has a practical monthly capacity of 3,000 finished gear assemblies. During October 2026, the company manufactured 2,400 accepted assemblies. The machining department recorded 245 machine-hours, while the labour department maintained separate attendance and production records for each skill category. The company follows a standard costing system and evaluates labour performance using actual wages paid, actual hours worked and standard hours allowed for actual production. The standard labour specification approved by the engineering department is as follows: Skilled workers: 1.5 hours per assembly at ₹60 per hour; Semi-skilled workers: 2 hours per assembly at ₹40 per hour; Unskilled workers: 0.5 hours per assembly at ₹30 per hour. Actual payroll and attendance records for October were: Skilled workers: 3,800 hours paid at ₹63 per hour, including 100 idle hours; Semi-skilled workers: 4,900 hours paid at ₹39 per hour, including 100 idle hours; Unskilled workers: 1,300 hours paid at ₹32 per hour, including 100 idle hours. The idle hours arose due to temporary interruptions in production and were paid to employees. All other paid hours were actually worked. The total actual wages were ₹4,72,100. There was no overtime premium, bonus, or separate productivity incentive during the period. Production was completed within the normal working schedule, and there was no reclassification of employees between skill categories. The finance department requires a complete analysis of labour cost performance, including the standard labour cost for actual production, labour rate variance, labour idle time variance and labour cost variance. For variance calculations, apply the standard rate to idle hours and actual worked hours separately. Actual hours paid must be used for the rate variance, whereas actual hours worked must be used for the efficiency variance. All figures are for the same accounting period.
What is the total standard labour cost for the actual production of 2,400 gear assemblies?
₹4,44,000 (correct answer)
₹4,72,100
₹4,31,000
₹4,57,000
Answer: A — ₹4,44,000
Explanation. Step 1: Calculate standard hours for actual output. Skilled = 2,400 × 1.5 = 3,600 hours; semi-skilled = 2,400 × 2 = 4,800 hours; unskilled = 2,400 × 0.5 = 1,200 hours. Step 2: Standard cost = (3,600 × ₹60) + (4,800 × ₹40) + (1,200 × ₹30) = ₹2,16,000 + ₹1,92,000 + ₹36,000 = ₹4,44,000. Option b is actual wages, not standard cost.
Where it goes wrong. Using actual payroll expenditure instead of calculating standard labour hours and standard rates for actual production.
Question 2 · 2 marks · Chapter 13: Standard Costing · hard
Calculate the aggregate Labour Rate Variance for October 2026.
₹9,100 (F)
₹9,100 (A) (correct answer)
₹13,000 (A)
₹28,100 (A)
Answer: B — ₹9,100 (A)
Explanation. Labour Rate Variance = Actual Hours Paid × (Standard Rate − Actual Rate). Skilled = 3,800 × (₹60 − ₹63) = ₹11,400 A. Semi-skilled = 4,900 × (₹40 − ₹39) = ₹4,900 F. Unskilled = 1,300 × (₹30 − ₹32) = ₹2,600 A. Net variance = ₹11,400 A + ₹2,600 A − ₹4,900 F = ₹9,100 A. Option c confuses idle time variance with rate variance.
Where it goes wrong. Using actual hours worked instead of actual hours paid, or failing to offset favourable and adverse rate variances.
Question 3 · 2 marks · Chapter 13: Standard Costing · medium
What is the total Labour Idle Time Variance for October?
₹10,000 (A)
₹12,000 (A)
₹13,000 (A) (correct answer)
₹15,000 (A)
Answer: C — ₹13,000 (A)
Explanation. Labour Idle Time Variance = Actual Idle Hours × Standard Rate. Skilled: 100 × ₹60 = ₹6,000 A. Semi-skilled: 100 × ₹40 = ₹4,000 A. Unskilled: 100 × ₹30 = ₹3,000 A. Total idle time variance = ₹6,000 + ₹4,000 + ₹3,000 = ₹13,000 adverse. It is adverse because wages are paid for hours during which no productive work is performed. Option b omits the unskilled idle time component.
Where it goes wrong. Calculating idle time variance at actual wage rates or excluding one labour category from total idle hours.
Question 4 · 2 marks · Chapter 13: Standard Costing · hard
What is the total Labour Cost Variance for October 2026?
₹15,100 (A)
₹28,100 (F)
₹21,000 (A)
₹28,100 (A) (correct answer)
Answer: D — ₹28,100 (A)
Explanation. Standard labour cost for actual output is ₹4,44,000. Actual labour cost is ₹4,72,100. LCV = ₹4,44,000 − ₹4,72,100 = ₹28,100 adverse. Reconciliation: LRV ₹9,100 A + idle time variance ₹13,000 A + efficiency variance ₹6,000 A = ₹28,100 A. Actual hours worked are 3,700 skilled, 4,800 semi-skilled and 1,200 unskilled. Option c incorrectly omits the idle time component.
Where it goes wrong. Calculating labour cost variance without reconciling the rate, idle time and efficiency components.
Question 5 · 2 marks · Chapter 13: Standard Costing · medium
Scenario. Meridian Industrial Appliances Ltd. manufactures precision motor housings using a team of skilled, semi-skilled and unskilled workers. The company has an installed monthly capacity of 1,200 motor housings and a standard production requirement of 7,200 labour-hours for every 1,000 housings manufactured. During November 2026, the plant completed 900 accepted motor housings. Machine utilisation was recorded at 86%, and no abnormal idle time or overtime was incurred. The approved standard labour composition for 1,000 units is: Skilled workers: 2,400 hours at ₹50 per hour; Semi-skilled workers: 3,600 hours at ₹30 per hour; Unskilled workers: 1,200 hours at ₹20 per hour. Actual labour records show that skilled workers worked 2,100 hours at ₹52 per hour, semi-skilled workers worked 3,000 hours at ₹29 per hour and unskilled workers worked 1,500 hours at ₹22 per hour. Total actual labour expenditure was ₹2,29,200. All paid hours were productive hours, and the three categories performed their respective assigned operations without interdepartmental transfers. Management believes that the change in worker composition affected productivity and wants to identify whether the overall efficiency difference resulted from the composition of the workforce or from the productivity of the workers as a whole. For this purpose, the cost accountant must first determine the standard hours allowed for the actual output. The actual total hours worked must then be redistributed according to the standard gang composition to calculate revised standard hours. Standard wage rates must be used for the efficiency, mix and yield calculations, whereas actual wage rates must be considered for labour rate variance. The company intends to reconcile labour rate variance and labour efficiency variance with the overall labour cost variance before submitting the report to the production director.
What is the total standard labour cost allowed for the actual output of 900 motor housings?
₹2,26,800 (correct answer)
₹2,29,200
₹2,28,600
₹2,24,400
Answer: A — ₹2,26,800
Explanation. Standard hours for 900 units are obtained by multiplying the per-1,000-unit standards by 90%. Skilled = 2,400 × 90% = 2,160 hours; semi-skilled = 3,600 × 90% = 3,240 hours; unskilled = 1,200 × 90% = 1,080 hours. Standard cost = (2,160 × ₹50) + (3,240 × ₹30) + (1,080 × ₹20) = ₹2,26,800. Option b is actual payroll expenditure.
Where it goes wrong. Using the standard labour budget for 1,000 units instead of scaling the hours to actual production.
Question 7 · 2 marks · Chapter 13: Standard Costing · medium
What is the Labour Yield Variance, also called Labour Revised-Efficiency Variance?
₹1,800 (A)
₹6,000 (A)
₹4,200 (A) (correct answer)
₹4,200 (F)
Answer: C — ₹4,200 (A)
Explanation. LYV = (SH − RSH) × SR. Skilled = (2,160 − 2,200) × ₹50 = ₹2,000 A. Semi-skilled = (3,240 − 3,300) × ₹30 = ₹1,800 A. Unskilled = (1,080 − 1,100) × ₹20 = ₹400 A. Total = ₹4,200 adverse. This measures productivity after neutralising the difference in gang composition. Option b is the adverse component incorrectly obtained by ignoring favourable mix effects.
Where it goes wrong. Using actual hours in actual proportions rather than revised standard hours while calculating the yield variance.
Question 8 · 2 marks · Chapter 13: Standard Costing · hard
What is the overall Labour Efficiency Variance, after combining Labour Mix Variance and Labour Yield Variance?
₹4,200 (A)
₹2,400 (A)
₹6,000 (F)
₹1,800 (F) (correct answer)
Answer: D — ₹1,800 (F)
Explanation. Labour Efficiency Variance = Labour Mix Variance + Labour Yield Variance. The mix variance is ₹6,000 favourable and the yield variance is ₹4,200 adverse. Therefore, LEV = ₹6,000 F − ₹4,200 A = ₹1,800 favourable. Direct verification gives the same result: (2,160 − 2,100) × ₹50 + (3,240 − 3,000) × ₹30 + (1,080 − 1,500) × ₹20 = ₹1,800 F.
Where it goes wrong. Adding the absolute values of mix and yield variances without considering their favourable and adverse directions.
Question 9 · 2 marks · Chapter 13: Standard Costing · medium
Scenario. Nova Medical Devices Ltd. manufactures precision components used in hospital infusion pumps. Its manufacturing facility has a normal monthly capacity of 3,200 accepted assemblies. During November 2026, the company completed 2,800 assemblies. The production line operated for 215 scheduled machine-hours, but the labour department reported some paid idle time due to machine calibration and material-handling interruptions. The standard labour requirement per finished assembly is: Skilled technicians: 1 hour at ₹80 per hour; Semi-skilled fitters: 1.5 hours at ₹50 per hour; Helpers: 0.5 hours at ₹30 per hour. Actual payroll records show the following: Skilled technicians worked 2,900 hours and were paid for 3,000 hours at ₹82 per hour; semi-skilled fitters worked 4,400 hours and were paid for 4,600 hours at ₹48 per hour; helpers worked 1,500 hours and were paid for 1,600 hours at ₹31 per hour. The difference between paid and worked hours represents idle time, and every idle hour was paid at the applicable actual hourly rate. Actual wages for the period amounted to ₹5,16,400. No overtime premium, bonus, or additional payroll adjustment was incurred. The production manager has requested an integrated labour variance report because the actual wage bill was higher than the standard allowance for the achieved production. The report must separately identify the effect of actual wage rates, paid idle time and working efficiency. The standard hours for actual production must be calculated category-wise from the output achieved. Actual hours paid are relevant for labour rate variance, but actual hours worked determine labour efficiency variance. The idle time variance must be calculated using the standard wage rates. The finance department also requires the final labour cost variance to be reconciled with the three component variances so that the source of the cost difference is clearly identifiable.
Determine the standard labour cost for the actual production of 2,800 medical-device assemblies.
₹4,76,000 (correct answer)
₹5,16,400
₹4,55,000
₹4,97,000
Answer: A — ₹4,76,000
Explanation. Standard hours for actual production are: technicians = 2,800 × 1 = 2,800 hours; fitters = 2,800 × 1.5 = 4,200 hours; helpers = 2,800 × 0.5 = 1,400 hours. Standard cost = (2,800 × ₹80) + (4,200 × ₹50) + (1,400 × ₹30) = ₹2,24,000 + ₹2,10,000 + ₹42,000 = ₹4,76,000. Option b is actual wages paid.
Where it goes wrong. Using actual hours or actual wages instead of standard hours and rates applicable to the achieved output.
Question 10 · 2 marks · Chapter 13: Standard Costing · hard
Calculate the overall Labour Rate Variance for the three employee categories.
₹1,600 (A)
₹1,600 (F) (correct answer)
₹21,000 (A)
₹40,400 (A)
Answer: B — ₹1,600 (F)
Explanation. LRV = Actual Hours Paid × (SR − AR). Technicians = 3,000 × (₹80 − ₹82) = ₹6,000 A. Fitters = 4,600 × (₹50 − ₹48) = ₹9,200 F. Helpers = 1,600 × (₹30 − ₹31) = ₹1,600 A. Net variance = ₹9,200 F − ₹6,000 A − ₹1,600 A = ₹1,600 F. Option c is the idle time variance, not the rate variance.
Where it goes wrong. Applying the standard rate to idle hours for rate variance instead of using the actual hours paid for each category.
Question 12 · 2 marks · Chapter 13: Standard Costing · hard
Calculate the Labour Cost Variance and verify the result using the component variances.
₹21,000 (A)
₹39,400 (A)
₹40,400 (F)
₹40,400 (A) (correct answer)
Answer: D — ₹40,400 (A)
Explanation. Standard labour cost = ₹4,76,000 and actual labour cost = ₹5,16,400. LCV = ₹40,400 adverse. Verification: LRV ₹1,600 favourable; idle time variance ₹21,000 adverse; LEV ₹21,000 adverse. Thus ₹21,000 A + ₹21,000 A − ₹1,600 F = ₹40,400 A. The efficiency variance is calculated using actual hours worked rather than paid hours. Option b does not reconcile with the actual payroll expenditure.
Where it goes wrong. Omitting idle time variance or combining labour rate and efficiency variances without recognising the separate paid-hours and worked-hours bases.
Question 13 · 2 marks · Chapter 13: Standard Costing · medium
Scenario. A factory has a standard wage rate of ₹50 per hour. During a period, 3,200 labour-hours were paid and total wages amounted to ₹1,66,400. Calculate the Labour Rate Variance.
A factory has a standard wage rate of ₹50 per hour. During a period, 3,200 labour-hours were paid and total wages amounted to ₹1,66,400. Calculate the Labour Rate Variance.
₹6,400 (A) (correct answer)
₹6,400 (F)
₹5,000 (A)
₹5,000 (F)
Answer: A — ₹6,400 (A)
Explanation. Actual rate = Actual wages ÷ Actual hours paid = ₹1,66,400 ÷ 3,200 = ₹52 per hour. LRV = Actual hours paid × (Standard Rate − Actual Rate) = 3,200 × (₹50 − ₹52) = ₹6,400 adverse. Actual wages exceed the standard wage amount for the same paid hours. Option b reverses the direction, while options c and d use an incorrect rate difference.
Where it goes wrong. Calculating labour rate variance using standard hours for production instead of actual hours paid.
Question 14 · 2 marks · Chapter 13: Standard Costing · hard
Scenario. An organisation paid workers for 3,600 hours, but only 3,450 hours were actually worked. The standard rate is ₹40 per hour. Calculate the Labour Idle Time Variance.
An organisation paid workers for 3,600 hours, but only 3,450 hours were actually worked. The standard rate is ₹40 per hour. Calculate the Labour Idle Time Variance.
₹6,000 (F)
₹6,000 (A) (correct answer)
₹5,400 (A)
₹4,500 (A)
Answer: B — ₹6,000 (A)
Explanation. Actual idle hours = 3,600 − 3,450 = 150 hours. Idle time variance = Idle hours × Standard rate = 150 × ₹40 = ₹6,000 adverse. The variance is adverse because the organisation paid for 150 hours during which workers did not perform productive work. Option c uses an incorrect idle-hour difference, while option a incorrectly treats paid idle time as favourable.
Where it goes wrong. Using the difference between standard hours and actual hours instead of the difference between actual paid hours and actual worked hours.
Question 15 · 2 marks · Chapter 13: Standard Costing · medium
Scenario. A manufacturing order required 2,400 standard labour-hours at ₹35 per hour. Actual employees were paid for 2,500 hours at ₹36 per hour. There was no separate idle time. What is the Labour Cost Variance?
A manufacturing order required 2,400 standard labour-hours at ₹35 per hour. Actual employees were paid for 2,500 hours at ₹36 per hour. There was no separate idle time. What is the Labour Cost Variance?
₹6,000 (F)
₹3,500 (A)
₹5,000 (A)
₹6,000 (A) (correct answer)
Answer: D — ₹6,000 (A)
Explanation. Standard labour cost = 2,400 × ₹35 = ₹84,000. Actual labour cost = 2,500 × ₹36 = ₹90,000. LCV = ₹84,000 − ₹90,000 = ₹6,000 adverse. The difference includes the effect of both higher hourly wages and additional labour-hours. Option c considers the excess hours at standard rate but ignores the adverse wage-rate effect. Option a reverses the direction.
Where it goes wrong. Calculating only the excess-hour cost while ignoring the difference between actual and standard wage rates.
Question 16 · 2 marks · Chapter 13: Standard Costing · hard
Scenario. Standard hours for actual production are 3,000 and the standard wage rate is ₹45 per hour. Actual employees were paid for 3,400 hours, including 200 idle hours. Calculate the Labour Efficiency Variance.
Standard hours for actual production are 3,000 and the standard wage rate is ₹45 per hour. Actual employees were paid for 3,400 hours, including 200 idle hours. Calculate the Labour Efficiency Variance.
₹9,000 (A) (correct answer)
₹18,000 (A)
₹9,000 (F)
₹4,500 (A)
Answer: A — ₹9,000 (A)
Explanation. Actual hours worked = Actual hours paid − Idle hours = 3,400 − 200 = 3,200 hours. LEV = Standard Rate × (Standard Hours − Actual Hours Worked) = ₹45 × (3,000 − 3,200) = ₹9,000 adverse. Option b incorrectly treats all 3,400 paid hours as productive hours. Option c reverses the direction. Idle time is separately analysed through the idle time variance.
Where it goes wrong. Including idle hours in actual hours worked while calculating labour efficiency variance.
Question 17 · 2 marks · Chapter 13: Standard Costing · medium
Scenario. A production gang has a standard composition of skilled, semi-skilled and unskilled labour in the ratio 2:3:5. Their standard rates are ₹60, ₹40 and ₹20 per hour respectively. Actual productive hours were 2,600 skilled, 3,500 semi-skilled and 4,900 unskilled hours. Calculate the Labour Mix Variance.
A production gang has a standard composition of skilled, semi-skilled and unskilled labour in the ratio 2:3:5. Their standard rates are ₹60, ₹40 and ₹20 per hour respectively. Actual productive hours were 2,600 skilled, 3,500 semi-skilled and 4,900 unskilled hours. Calculate the Labour Mix Variance.
₹20,000 (F)
₹20,000 (A) (correct answer)
₹24,000 (A)
₹12,000 (F)
Answer: B — ₹20,000 (A)
Explanation. Total actual hours worked = 2,600 + 3,500 + 4,900 = 11,000 hours. Revised standard hours in the 2:3:5 ratio are 2,200, 3,300 and 5,500. Mix variance: Skilled = (2,200 − 2,600) × ₹60 = ₹24,000 A; semi-skilled = (3,300 − 3,500) × ₹40 = ₹8,000 A; unskilled = (5,500 − 4,900) × ₹20 = ₹12,000 F. Net = ₹20,000 adverse.
Where it goes wrong. Using the actual workforce proportions as revised standard proportions instead of applying the approved standard gang ratio.
Question 18 · 2 marks · Chapter 13: Standard Costing · hard
Scenario. For a particular output, standard hours are 8,100. Revised standard hours, after applying the standard labour composition to actual hours worked, are 8,400. The standard wage rate is ₹25 per hour. Calculate the Labour Yield Variance.
For a particular output, standard hours are 8,100. Revised standard hours, after applying the standard labour composition to actual hours worked, are 8,400. The standard wage rate is ₹25 per hour. Calculate the Labour Yield Variance.
₹7,500 (F)
₹8,100 (A)
₹7,500 (A) (correct answer)
₹300 (A)
Answer: C — ₹7,500 (A)
Explanation. Labour Yield Variance = Standard Rate × (Standard Hours − Revised Standard Hours). Substituting: ₹25 × (8,100 − 8,400) = ₹25 × (−300) = ₹7,500 adverse. Actual hours in standard proportions exceed the standard hours allowed for actual output, indicating lower productivity. Option a reverses the variance direction, while option d gives only the hour difference without multiplying by the standard rate.
Where it goes wrong. Confusing the difference in revised and standard hours with the monetary variance or reversing the favourable/adverse classification.
Question 19 · 2 marks · Chapter 13: Standard Costing · medium
Scenario. A manufacturing company reports Labour Rate Variance of ₹9,000 favourable, Idle Time Variance of ₹3,000 adverse, Labour Mix Variance of ₹4,000 adverse and Labour Yield Variance of ₹10,000 favourable. What is the Labour Cost Variance?
A manufacturing company reports Labour Rate Variance of ₹9,000 favourable, Idle Time Variance of ₹3,000 adverse, Labour Mix Variance of ₹4,000 adverse and Labour Yield Variance of ₹10,000 favourable. What is the Labour Cost Variance?
₹12,000 (A)
₹6,000 (A)
₹12,000 (F) (correct answer)
₹16,000 (F)
Answer: C — ₹12,000 (F)
Explanation. First, LEV = LMV + LYV = ₹4,000 adverse + ₹10,000 favourable = ₹6,000 favourable. Next, LCV = LRV + Idle Time Variance + LEV = ₹9,000 favourable − ₹3,000 adverse + ₹6,000 favourable = ₹12,000 favourable. Option a incorrectly reverses the final direction, while option d adds all favourable and adverse magnitudes without netting them.
Where it goes wrong. Adding all component variances as positive amounts instead of reconciling them using their favourable and adverse signs.
Question 20 · 2 marks · Chapter 13: Standard Costing · hard
Scenario. A factory follows a standard labour composition of skilled, semi-skilled and unskilled workers in the ratio 3:4:5. Actual productive hours are 2,500, 3,100 and 4,000 respectively. Standard rates are ₹50, ₹35 and ₹20 per hour. Calculate the Labour Mix Variance.
A factory follows a standard labour composition of skilled, semi-skilled and unskilled workers in the ratio 3:4:5. Actual productive hours are 2,500, 3,100 and 4,000 respectively. Standard rates are ₹50, ₹35 and ₹20 per hour. Calculate the Labour Mix Variance.
₹5,000 (F)
₹3,500 (A)
₹1,500 (F)
₹1,500 (A) (correct answer)
Answer: D — ₹1,500 (A)
Explanation. Total actual hours worked = 2,500 + 3,100 + 4,000 = 9,600. Revised standard hours in the 3:4:5 ratio are 2,400, 3,200 and 4,000. Skilled variance = (2,400 − 2,500) × ₹50 = ₹5,000 A. Semi-skilled = (3,200 − 3,100) × ₹35 = ₹3,500 F. Unskilled variance is nil. Net LMV = ₹1,500 adverse. Option b ignores the skilled adverse variance.
Where it goes wrong. Calculating the gang variance from the difference in workforce numbers rather than redistributing actual hours worked according to the standard ratio.
Question 21 · 2 marks · Chapter 13: Standard Costing · medium
Scenario. A factory employs three labour categories. Skilled workers: 2,000 hours paid at ₹62 per hour against a standard rate of ₹60; semi-skilled workers: 3,000 hours paid at ₹38 per hour against a standard rate of ₹40; unskilled workers: 4,000 hours paid at an unknown actual rate against a standard rate of ₹25. If the aggregate Labour Rate Variance is ₹13,000 adverse, what is the actual hourly rate paid to unskilled workers?
A factory employs three labour categories. Skilled workers: 2,000 hours paid at ₹62 per hour against a standard rate of ₹60; semi-skilled workers: 3,000 hours paid at ₹38 per hour against a standard rate of ₹40; unskilled workers: 4,000 hours paid at an unknown actual rate against a standard rate of ₹25. If the aggregate Labour Rate Variance is ₹13,000 adverse, what is the actual hourly rate paid to unskilled workers?
₹28.75 (correct answer)
₹24.50
₹25.75
₹29.50
Answer: A — ₹28.75
Explanation. Skilled LRV = 2,000 × (₹60 − ₹62) = ₹4,000 A. Semi-skilled LRV = 3,000 × (₹40 − ₹38) = ₹6,000 F. Net known variance = ₹2,000 F. Let the unskilled actual rate be R. Then ₹2,000 F + 4,000(₹25 − R) = ₹13,000 A. Therefore 4,000(₹25 − R) = −₹15,000, giving R = ₹28.75 per hour.
Where it goes wrong. Ignoring the favourable semi-skilled rate variance while determining the missing actual rate for unskilled labour.
Question 22 · 2 marks · Chapter 13: Standard Costing · hard
Scenario. A company reports Labour Rate Variance of ₹8,000 adverse, Idle Time Variance of ₹5,000 adverse, Labour Mix Variance of ₹3,000 favourable and Labour Yield Variance of ₹4,000 adverse. Calculate the overall Labour Cost Variance.
A company reports Labour Rate Variance of ₹8,000 adverse, Idle Time Variance of ₹5,000 adverse, Labour Mix Variance of ₹3,000 favourable and Labour Yield Variance of ₹4,000 adverse. Calculate the overall Labour Cost Variance.
₹14,000 (F)
₹14,000 (A) (correct answer)
₹10,000 (A)
₹16,000 (A)
Answer: B — ₹14,000 (A)
Explanation. Labour Efficiency Variance = LMV + LYV = ₹3,000 favourable − ₹4,000 adverse = ₹1,000 adverse. LCV = LRV + Idle Time Variance + LEV = ₹8,000 adverse + ₹5,000 adverse + ₹1,000 adverse = ₹14,000 adverse. Option c omits idle time variance, while option d adds the absolute mix and yield amounts instead of netting them before reconciliation.
Where it goes wrong. Combining mix and yield variances incorrectly or forgetting that labour cost variance includes idle time variance when paid and worked hours differ.
Question 23 · 2 marks · Chapter 13: Standard Costing · medium
Scenario. Standard hours for actual production are 6,000 and the standard hourly rate is ₹40. Actual wages paid were ₹2,52,000 at an actual rate of ₹42 per hour. Workers were paid for 250 idle hours. Calculate the Labour Efficiency Variance.
Standard hours for actual production are 6,000 and the standard hourly rate is ₹40. Actual wages paid were ₹2,52,000 at an actual rate of ₹42 per hour. Workers were paid for 250 idle hours. Calculate the Labour Efficiency Variance.
₹10,000 (A)
₹12,000 (A)
₹10,000 (F) (correct answer)
₹12,000 (F)
Answer: C — ₹10,000 (F)
Explanation. Actual hours paid = ₹2,52,000 ÷ ₹42 = 6,000 hours. Actual hours worked = 6,000 − 250 = 5,750 hours. LEV = (SH − AH worked) × SR = (6,000 − 5,750) × ₹40 = ₹10,000 favourable. The actual hours worked are lower than standard hours, reflecting a productive time saving. Option b is the rate variance in magnitude.
Where it goes wrong. Using paid hours directly in the efficiency calculation without deducting idle hours, or treating idle time as productive time saved.
Question 24 · 2 marks · Chapter 13: Standard Costing · hard
Scenario. Standard hours for actual output are: skilled 2,000 hours at ₹50; semi-skilled 3,000 hours at ₹30; unskilled 5,000 hours at ₹20. Actual hours paid are 2,200, 3,100 and 5,200 respectively. Idle hours in the three categories are 100, 100 and 200 respectively. What is the total Labour Efficiency Variance?
Standard hours for actual output are: skilled 2,000 hours at ₹50; semi-skilled 3,000 hours at ₹30; unskilled 5,000 hours at ₹20. Actual hours paid are 2,200, 3,100 and 5,200 respectively. Idle hours in the three categories are 100, 100 and 200 respectively. What is the total Labour Efficiency Variance?
₹5,000 (F)
₹2,100 (A)
₹2,900 (A)
₹5,000 (A) (correct answer)
Answer: D — ₹5,000 (A)
Explanation. Actual hours worked are: skilled 2,100; semi-skilled 3,000; unskilled 5,000. LEV = (SH − AH worked) × SR. Skilled = (2,000 − 2,100) × ₹50 = ₹5,000 A. Semi-skilled and unskilled variances are nil. Total LEV = ₹5,000 adverse. The ₹2,100 and ₹2,900 alternatives represent separate mix and yield components obtained after redistribution, not total efficiency variance.
Where it goes wrong. Using actual paid hours instead of actual worked hours or reporting only the mix or yield component as total efficiency variance.
Question 25 · 2 marks · Chapter 13: Standard Costing · medium
Scenario. A factory manufactures a product using skilled, semi-skilled and unskilled workers. Standard hours for actual output are 3,000, 4,000 and 2,000 respectively, at standard rates of ₹50, ₹30 and ₹20 per hour. Actual hours paid are 3,100, 3,900 and 2,100 respectively, at actual rates of ₹52, ₹29 and ₹21 per hour. Idle hours are 100 skilled, nil semi-skilled and 100 unskilled. Calculate the overall Labour Cost Variance.
A factory manufactures a product using skilled, semi-skilled and unskilled workers. Standard hours for actual output are 3,000, 4,000 and 2,000 respectively, at standard rates of ₹50, ₹30 and ₹20 per hour. Actual hours paid are 3,100, 3,900 and 2,100 respectively, at actual rates of ₹52, ₹29 and ₹21 per hour. Idle hours are 100 skilled, nil semi-skilled and 100 unskilled. Calculate the overall Labour Cost Variance.
₹8,400 (A) (correct answer)
₹8,400 (F)
₹7,000 (A)
₹4,400 (A)
Answer: A — ₹8,400 (A)
Explanation. Standard labour cost = (3,000 × ₹50) + (4,000 × ₹30) + (2,000 × ₹20) = ₹3,10,000. Actual wages = (3,100 × ₹52) + (3,900 × ₹29) + (2,100 × ₹21) = ₹3,18,400. LCV = ₹3,10,000 − ₹3,18,400 = ₹8,400 adverse. Verification: LRV ₹4,400 A + idle time ₹7,000 A − efficiency variance ₹3,000 F = ₹8,400 A.
Where it goes wrong. Ignoring the favourable efficiency variance or adding idle time variance to the rate variance without accounting for the efficiency benefit.
ICAI SM: Cost and Management Accounting, Chapter 13 (Standard Costing)
Questions people ask
What does this Chapter 13: Standard Costing - Test 2 practice test cover?
This practice test carries 50 marks across 25 questions covering core costing principles, cost accounting standards, formulas, mathematical models, and practical ICAI case scenarios.
How many questions are there and what is the time limit?
There are 25 questions carrying 2 marks each, giving a maximum score of 50 marks in 60 minutes with no negative marking.
Which study material and syllabus apply to these questions?
Questions strictly reflect the official ICAI Study Material for CA Intermediate Paper 4 Cost and Management Accounting for the 2027 examination sessions.
Can I sit this test in both exam and practice modes?
Yes. Practice mode gives immediate answers with mathematical step-by-step workings and trap explanations after each question. Exam mode simulates actual exam conditions with a live timer and issues a downloadable performance certificate.
