CHAPTER 2: COST ACCOUNTING, JOB COSTING & BATCH COSTING Cost: Cost means the amount of expenditure incurred on a particular thing. CAS-1 (Cost Accounting Standard 1, issued by the ICWA, India) defines Cost as: Cost is a measurement, in monetary terms, of the amount of resources used for the purpose of production of goods or rendering services. Costing: Costing means the process of ascertainment of costs. Costing involves the following steps steps (i) Ascerta Ascertaini ining ng or collect collecting ing costs costs (ii) (ii) Analys Analysing ing or classi classifyi fying ng costs costs into into basic basic elemen elements ts such such as Materia Material, l, Labour Labour,, Expens Expenses es etc. etc. and (iii) Alloca Allocatin ting g total total costs costs to a ‘particular thing’ i.e. a product, a contract or a process. Thus cost can now be defined as the total expenditure, duly classified into materials, labour, expenses etc. allocated to a particular product or contract or process. Cost Accounting: The Institute of Cost and Management Accountant, England (ICMA) has defined Cost Accounting as – “the process of accounting for the costs from the point at which expenditure incurred, to the establishment of its ultimate relationship with cost centres and cost units. In its widest sense, it embraces the preparation of statistical data, the application of cost control methods and the ascertainment of the profitability of activities carried out or planned”.
Cost accounting is a term broader than costing. It covers costing plus the reporting and control of costs. Thus Cost Accounting = Costing + Cost Reporting + Cost Control. Cost accounting can be defined as the technique of recording, classification, allocation, reporting and control of costs. Objectives of cost accounting: Cost accounting has the following basic aspects or objectives: 1. Costing: Costing: It invol involves ves the following following basic aspects aspects or or 5 ‘A’s: a. Ascertain costs relating to a particular period, b. Analyse or classify costs under different heads of accounts such as material, labour, expenses etc., c. Allocate costs fully to the direct expenses or the specific costs such as raw materials, labour to the relevant products, contracts or processes, d. Apportion or distribute common costs to each product, contract or process on a suitable basis and e. Absorb the total expenses of a department over its products so as to finalise the cost of each product that is then reported to the management. 2. Cost reporting: reporting: Cost Cost reporti reporting ng has has the following following aspects:aspects:a. What to report or the nature of information to be presented should be relevant and precise. b. Whom to report will determine the scope of the report to be submitted to the top management. c. When to report – daily, weekly, monthly, quarterly or yearly etc. d. How to report or the format will depend on the factors mentioned above. Once the cost report is received, management can take action to control the costs. 3. Cost Cost Contr Control ol:: Cost Cost contro controll has has been been define defined d by the ICMA as “the “the guida guidanc ncee and and regulation by executive action of the costs of operating an undertaking”. Thus cost control means the control of costs by management. Following are the aspects or stages of cost control.
a. Set targets for cost, production, profits etc. for each period. b. Measure Actual Performance relating to cost, production profits for the period concerned. c. Compare targets with actuals to find out the variations d. Analyse variations, the causes for variations whether favourable or adverse are to be invest investiga igated ted.. While While advers adversee variat variation ionss denote denote wastag wastages es and loses, loses, favourable variations may indicate the targets fixed are very low. In both cases the exact reasons for the variations are to be known. e. Take action once the causes are known to eliminate avoidable losses etc. 4. Other aspects: aspects: The other other aspect aspectss or object objectives ives of of cost cost accounting accounting are as follows: follows: a. Prov Provid idee requi require red d data data for for fixing fixing sales price for submitting tenders, quotations etc. b. b. Assi Assist st the the mana manage geme ment nt in controlling inventory for raw materials, goods in process, finished goods, spares and consumables etc. c. Advi Advice ce man managem agemen entt on future policies regarding regarding expansion, expansion, growth, growth, capital capital investment etc. d. Ins Install tall lab labou our r incentive incentive system for getting maximum productivity from labour at optimum cost. e. Advi Advice ce mana manage geme ment nt in deciding optimum product-mix , merits and demerits of alternative alternative courses of actions actions (make or buy etc.,) introduction of automation, mechanization, rationalization of system of production etc. Thus the objectives can be summarized as follows: 1. Ascer Ascerta tain inme ment nt of cost costss 2. Esti Estima mati tion on of of cost costss 3. Cost con control 4. Cost Cost red reducti uction on 5. Dete Determ rmin inin ing g selli selling ng pri price ce 6. Facilitating Facilitating preparation preparation of financi financial al and other statements statements 7. Provid Providing ing basi basiss for for operat operating ing policy policy Importance and advantages of Cost Accounting: Cost accounting is not only important to the management and owners but also to many others like like the the work worker ers, s, the the Gove Govern rnme ment nt,, the the cons consum umers ers,, the the publ public ic at large large and and so on. on. The The advantages are as follows.
1. To the manage managemen mentt and the owners: owners: Cost Cost accountin accounting g helps the the manageme management nt of the concern to ascertain the cost and profitability of each individual product / service/ contract/ process/ division/ branch separately. This also helps in valuation of the closing stock of goods at the end of the year. It helps the management of the concern in controlling controlling costs in reducing the avoidable expenditure, and minimizing wastages and losses. It ensures the reconciliation of quantity of input with the quantities of output, wastages and scrap. The management is thus able to regulate and monitor the movement movement of materials thus preventing preventing theft and loss of materials materials during processing processing and handling. It is of great help to the management in taking several decisions such as, which products to produce more, how much to produce, whether to make or buy a component, what price to charge or quote. Thus cost accounting is an invaluable decisi decision on aid to decision making. It also facilitates in preparation of budgets and implementation of budgetary control in the organization. The end result of all the above advantages of cost accounting is maximization of profits of the concern thus
benef benefiti iting ng the owners owners by increas increasing ing their their net worth worth or the share share prices prices,, higher higher dividends etc. 2. To the workers: Cost Cost accounting accounting has an elaborate elaborate system of assessing assessing the the performance of workers and rewarding them suitably through incentives and bonus. The increase in profits due to a cost accounting system also leads to higher remuneration r emuneration and bonus to the workers. 3. To the Governm Government ent / Consumer Consumerss / Public: Public: In case the produc products ts are under under price control, control, cost accounting furnishes the data required by the government for fixing fair prices . Consumers benefit since the prices fixed on the basis of the cost data are just and reasonable and cannot be too high. It also leads to efficiency and productivity in the industrial sector. It ensure optimum utilization of the scarce economic resources of the country. Cost accounting leads to maximum profits for an organization. Naturally the Government also gains by way of more taxes on production, income and sales etc. The higher revenue is used by the Government for public welfare and economic development. Criticisms of Cost accounting: 1. Duplic Duplicati ation: on: It is argued argued that cost accounti accounting ng is duplic duplicatio ation n when when a good good financial financial accounting system is already in operation. Cost accounting takes its basic data from books of accounts and just rearranges it in a different way. 2. Inap Inappl plic icab able: le: In a conc concer ern n prod produc ucin ing g a sing single le prod produc uctt invo involv lvin ing g no comp comple lex x proce processe sses, s, cost cost account accounting ing is inappl inapplica icable. ble. It is also also of no use use in non-pr non-profi ofitab table le organizations or in agriculture etc. 3. Not useful useful for decisio decision n making: making: In many many cases, cases, the decision decisionss of the managem management ent are not based on cost accounting data. Thus the decision regarding which item to produce and how much to produce depends on the license given by the Government and the market forces of demand and supply. 4. Expens Expensive ive and routine routine:: A cost accounti accounting ng system system is quiet quiet expensiv expensivee to instal installl and operate. At times the cost accounting systems become mere routing of filling the forms and submittin submitting g standard standard reports. Non-cooperatio Non-cooperation n from staff also may lead to failure of the system in many concerns.
However, proper planning and implementation of the cost accounting system will overcome these criticisms and would stand null and void in view of the objectives, importance and advantages of the cost accounting system. Functions of Cost Accountant: The main functions of a cost accountant can be summarized as follows: 1. Determining Determining cost cost and analyzi analyzing ng income: income: A cost accoun accountant tant determine determiness the cost of of a job, product or process as the case may be. He analyses and classifies costs according to different cost elements, viz., materials, labour and expenses. Such analysis enables him to tell the management the significance of the different cost elements and fixation of the selling prices of the products manufactured by the business. He advises the management about the profitability or otherwise of each job, product or process. Thus, he helps the management in maximizing business profits. 2. Providing cost data data for planning and control: A cost accountant accountant collects, classifies and prese presents nts in approp appropria riate te form form suitab suitable le data data to the manage managemen mentt for planni planning ng and controlling the operations of the business. He makes constant endeavour to control and reduce the cost by the following techniques:
a. He submits submits regular regular reports reports to the manageme management nt regardin regarding g wastage wastage of materi material, al, idle time, idle capacity, etc. He identifies the causes and suggests suitable controlling measures to prevent or reduce losses on account of these causes. b. He makes product product-wise -wise or process process-wise -wise comparis comparisons ons to identify identify non-pro non-profitabl fitablee products or processes. c. He develops develops cost cost conscious consciousness ness in the organizat organization ion by adopti adoption on of budgetar budgetary y control and standard costing techniques. d. He main mainta tain inss an even even flow flow of mater materia ials ls and and at the the same same time time prev preven ents ts unneces unnecessary sary invest investmen mentt of materi materials als throug through h differe different nt materia materiall contro controll techniques e.g. ABC analysis, perpetual inventory system, materials turnover ratios, fixation of different levels of materials etc. e. He organizes organizes various various cost reductio reduction n programmes programmes with with the co-operat co-operation ion and coordination of different departmental heads. 3. Undertakin Undertaking g special cost cost studies studies for manageria manageriall decision-makin decision-making: g: A cost accounta accountant nt underta undertakes kes specia speciall cost cost studie studiess and carries carries out invest investiga igatio tion n for collec collectin ting g and presenting suitably the data to the management for decision-making regarding the following areas: a. Introducti Introduction on of new new products, products, replacement replacement of manual manual labour labour by machin machines es etc. b. Make or buy buy decisions, decisions, replacin replacing g or repairing repairing old machine machines, s, accepting accepting orders orders below cost, etc. c. Expansion Expansion plans, plans, install installation ation of new new capital capital project, project, etc. etc. d. Utilisation Utilisation of idle capacity capacity and and developme development nt of a proper proper informa information tion system system to provide prompt and correct cost information to the management. e. Instal Installati lation on of of a cost cost audit audit syste system. m. All types of manufacturing concerns can broadly be classified into two categories – (i) Mass production concerns, (ii) Special order concerns. Mass production concerns such as chemical plants, flour mills, paper manufacturing, tyre and rubber companies etc., produce uniform standa standard rd produc products ts and involv involvee general generally ly a contin continuou uouss produc productio tion n proces process. s. The finish finished ed products are the result of successive operations. On the other hand, special-order concerns manufacture products in clearly distinguishable lots in accordance with special orders and indi indivi vidu dual al spec specif ific icat atio ions ns.. Prin Printi ting ng shop shops, s, cons constr truc ucti tion on comp compan anie ies, s, mach machin inee tool tool manufacturing, repair shops, wood-working shops etc., come in this category. In case of mass production concerns the products when produced are of the same type, and involve the same material and labour and pass through the same set of process. In such industries each process is designated as a separate cost-centre and the cost per unit is calculated by dividing total cost of the process with the total number of units produced by the process. The cost of production of the product is obtained by adding the unit costs of various processes through which the product has passed. This method of costing is known as process costing. Job Costing: In case of special-order concerns products produced or jobs undertaken are of diverse nature. They involve materials and labour in different quantities and entail different amounts of overhead costs. In such concerns it is necessary to keep a separate record of each lot of products or jobs from the time the work on the job or product begins till it is completed. A separate job card or sheet is maintained for each job or product in which all expenses of materials, labour, overheads are entered and cost of completing a job or manufacturing a product is found out. Such a cost system is known as job or terminal or specific costing.
Objectives of job costing:
1. It help helpss in findi finding ng out out the the cost cost of produ product ctio ion n of every every orde orderr and and thus thus helps helps in ascertaining profit or loss made out on its execution. The management can judge the profitability of each job and decide its future courses of action. 2. It helps helps manageme management nt in making making more more accurate accurate estimates estimates about about the costs costs of simila similar r jobs to be executed in future on the basis of past records. The management can conveniently and accurately determine and quote prices for orders of a similar nature which are in prospect. 3. It enables enables management management to control control operatio operational nal inefficiency inefficiency by by comparing comparing actual actual costs with the estimated ones. A system of job costing should be adopted after considering the following two factors. a. Each Each order or job should should be contin continuou uously sly identi identifiab fiable le from the raw materia materiall stage to the stage of completion. b. The syste system m is very very expensi expensive ve because because it require requiress a lot of clerical clerical work work in estimati estimating ng costs, designing and scheduling of production. It should, therefore, be adopted when absolutely warranted. Procedure: The following is the procedure adopted for costing purposes in a concern using job costing: 1. Job order number: number: Every order received received is allotted allotted a certain certain number number from a running running list maintained for this purpose. Every order or job will be known by its number throughout its production process in the factory. 2. Prod Produc ucti tion on / job job orde order: r: A prod produc ucti tion on / job job orde orderr is a writ written ten order order issued issued to the the manufa manufactu cturin ring g depart departmen mentt to proceed proceed with a job. job. It is issued issued by the producti production on plan planni ning ng depa depart rtme ment nt on recei receipt pt of a job job orde orderr to the the fore forema man n of the the rele releva vant nt department. Instructions to the costing department to collect particulars of costs on execution of the job are also issued simultaneously. The production order is prepared with sufficient copies for all the departmental managers or foreman who will be required to take any part in the production. 3. Bills Bills of materials: materials: The produc productio tion n and planning planning depart departmen mentt also also prepares prepares a list list of materials and stores required for the completion of the job. A copy is also sent to the concerned foreman with the production order which serves as an authority to him for collecting the materials and stores mentioned from the storekeeper. On the same pattern a list of tools required is also prepared. 4. Job cost cost card: Job Job cost card card or job cost cost sheet is the the most import important ant document document used used in the job costing system. A separate card or cost sheet is maintained for each job in which all expenses regarding materials, labour and overheads are recorded directly from costing records. The method of finding out the cost of these elements in respect of a particular order is as follows. a. Materials: The information regarding cost of materials or stores used for a particular job order can be obtained from materials or stores requisition slips. In case of large job orders, materials abstracts can be prepared for finding out the total value of materials issued to different jobs. b. Labour: The cost of labour incurred on each job can be ascertained with the help of time and job cards. In case of a large number of jobs, preparation of wages abstract may considerably help in computing the amount paid as wages for completion of specific jobs. Wages paid for indirect labour will constitute an item of factory overheads. c. Overheads: Every job will be charged with amount of overheads determined on the basis of the method selected for allocation of overheads. Normally on
the basis of past results an overhead rate is determined and each job is charged for overheads at the pre-determined rate. Profit or loss on a job can also be found out by preparing a job account. The job account is debited with all expenses incurred on the job and is credited with the job price. The difference of the two sides will be the profit or loss made or suffered on the job. 5. Work-in-pro Work-in-process: cess: The The account account is maintained maintained in in the cost cost ledger ledger and it represent representss the jobs under production. The account may be maintained in any of the following two ways depending upon the requirements of the business: a. A compos composite ite work-inwork-in-proces processs account account for the the entire entire factory factory.. b. A compos composite ite work-in work-in-pr -proce ocess ss account account for every every departme department. nt. For example, example, if the factory has three departments A, B and C, a work-in-process for each of these three departments will be opened. The work-i work-in-p n-proc rocess ess account account is period periodica ically lly debite debited d with with all costs costs direct direct and indirect incurred in execution of the jobs. At intervals of month or so a summary of completed jobs is prepared and the work-in-process account is credited with the cost of completed completed jobs. In case work-in-progres work-in-progresss account account for each department department of the factory has been opened, it will be necessary to find out the cost of completed jobs regarding each department. The balance in work-in-process account at any time represents the cost of jobs not yet completed. 6. Job ticket: ticket: In order order to provid providee information information regarding regarding the progress progress of of each job job at each operation, operation, generally generally a job ticket is issued issued by the production production control department. department. The ticket contains detachable portions for different operations. The job ticket is useful for both production control and costing departments. On completion of an operation, the relevant portion of ticket is detached and sent to production control department. This enables production control department in keeping production schedule up-to-date. On the basis of detached portion a departmental summary of production can be prepared which is very useful for costing costing purposes. purposes. Moreover, Moreover, the amount amount of work-in-process work-in-process as shown by the cost ledger can be checked by listing the ticket number of jobs in process in any department and valuing this list. 7. Progress Progress advice: advice: The foreman foreman of a departm department ent may be required required to to send periodi periodically cally a statement regarding the stage of completion of each job to ensure completion of jobs by scheduled dates. Such a note is called “progress advice”. Advantages of job costing: 1. Job costing costing enables enables the the management management to identify identify spoile spoiled d and defective defective work work in respect respect to partic particula ularr produc productio tion n orders orders,, depart departmen ments ts or group groupss of worker workerss and hence hence the management can fix up responsibility for inefficiency. 2. Manage Managemen mentt can determi determine ne the trends in costs and compar comparee the operati operating ng efficien efficiency cy of men and machines in each cost centre. It can also determine the completion cost of each job. 3. It enables enables the preparati preparation on of estimates estimates of of costs of of jobs before before product production. ion. 4. It enables enables comparison comparison of of estimated estimated costs with with actual actual costs as the the costs are analysed analysed on the basis of costs, services and production. 5. It makes makes availabl availablee to the managem management ent a comple complete te file of producti production on orders orders which which contains valuable statistics on cost. 6. It enab enable less asce ascert rtai ainm nmen entt of prof profit it or loss loss on each each job job imme immedi diat atel ely y afte afterr thei their r completion. 7. It enables enables the managem management ent to identify identify unprof unprofitable itable jobs. jobs. 8. In case of cost cost plus contracts, contracts, job job costing costing enables to provid providee precise quotatio quotations. ns.
9. It help helpss in in prod product uction ion planni planning. ng. 10. It facilitates facilitates fixation fixation of selling price. price. Limitations of job costing: 1. Job Job cost costin ing g invo involv lves es a lot lot of cleri clerical cal work in iden identi tify fyin ing g mate materi rials als,, labo labour ur and and overheads with specific jobs and departments. 2. Management Management cannot cannot evaluate evaluate precisely precisely the the operating operating efficienc efficiency y of men and and machines. machines. 3. Since costs costs ascertain ascertained ed and compiled compiled are are historical historical costs, costs, they they are not of much much utility utility to the management. 4. It does does not not appl apply y budg budgeta etary ry cont contro roll to impo import rtan antt cost cost elem element entss such such as labou labour, r, materials and overheads. 5. Job costs costs over over any period period of time time cannot be be compared compared if major major economic economic changes changes take place in between. 6. It is expensiv expensivee to operate operate and errors errors are possib possible le due to increas increased ed clerical clerical work. Batch Costing: Batch costing is a modified form of job costing. While job costing is concerned with costing of jobs that are executed against specific orders of the customers, batch costing is used where articles are manufactured in definite batches. The articles are usually kept in stock for selling to customers on demand. The term batch refers to the lot in which the articles are to be manufactured. Whenever a particular product is required, one unit of such product is not produced but a lot of say 500 or 1000 units of such product are produced. It is therefore also known as “Lot Costing”. This method of costing is used in case of pharmaceutical or drug industries, ready-made garment factories, industries manufacturing component parts of radio sets, television sets, watches, etc. The costing procedure for batch costing is similar to that under job costing except with the difference that a batch becomes the cost unit instead of a job. Separate job cost sheets are maintained for each batch of products. Each batch is allotted a number. Material requisitions are prepared batchwise, the direct labour is engaged batchwise and the overheads are also recovered batchwise. Cost per unit is ascertained by dividing the total cost of a batch by number of items produced in that batch. Ordinary principles of inventory control are used. Production orders are issued only when the stock of finished goods reaches the ordering level. In case the batches are repetitive, the costing work is much simplified.
Since in batch costing production production is done in batches and each batch consists consists of a number of units, the determination of optimum quantity to constitute an economical batch is all the more important. Such a quantity can be fixed on the basis of same formulae and principles as are applicable to economic order quantity of materials. Economic Batch Quantity
=
2U x P S
Where: U = Annual demand P = Setting up and order placing costs per batch S = Storage or inventory carrying over cost per unit per annum
CHAPTER 3: STANDARD COSTING
Standard costing is defined as – “the preparation and use of Standard Costs, their comparison with actual costs and the analysis of variance as to their causes and point of incidence. ICWA London had defined Standard Costing as – “the preparation of Standard Costs and applying them to measure the variations of actual costs from standard costs and analyzing the causes of variations with a view to maintain maximum efficiency in production”. Material Variances: 1. Mate Materia riall Cost Cost Var Varia ianc ncee [MCV [MCV]] It is the difference between the standard cost of material specified for the output achieved and the actual cost of direct material used. It is said to be favourable when standard cost is more than actual cost and adverse when actual cost exceeds standard costs. It is further divided into Material Usage Variance and Material Price Variance.
MCV = SC – AC = (SQ x SP) – (AQ x AP) 2. Mate Materia riall Usage Usage Vari Varian ance ce [MUV [MUV]] It is that portion of the Material Cost Variance which is due to the difference between the Standard Quantity specified for the actual output and the Actual Quantity used for the actual output. It is said to be favourable when standard quantity is more than actual quantity and adverse when actual quantity exceeds standard quantity. MUV = (SQ – AQ) x SP 3. Mate Materia riall Price Price Vari Varian ance ce [MPV [MPV]] It is that portion of the Material Cost Variance which is due to the difference between the Standard Price specified for the Actual Output and the Actual Price paid. Material Price Variance is said to be favourable when the actual price is less than the standard price and adverse when the actual price is more than the standard price. MPV = (SP – AP) x AQ 4. Veri Verifi fica cati tio on Material Cost Variance = Material Usage Variance + Material Price Variance i.e. MCV = MUV + MPV
Labour Variances:
1. Labo Labour ur Cos Costt Varia Varianc ncee [LCV [LCV]] It is the difference between the standard cost of labour specified for the output achieved and the actual cost of direct labour used. It is said to be favourable when standard cost is more than actual cost and adverse when actual cost exceeds standard costs. It is further divided into Labour Efficiency Variance and Labour Rate Variance. LCV
= SC – AC = (SH x SR) – (AH x AR)
2. Labour Labour Effici Efficienc ency y Varia Variance nce [LEV] [LEV] It is that portion of the Labour Cost Variance which is due to the difference between the Standard Hours specified specified for the actual output output and the Actual Hours used for the actual output. It is said to be favourable when standard hour is more than actual hour and adverse when actual hour exceeds standard hour. LEV = (SH – AH) x SR 3. Labo Labour ur Rate Rate Varia Varianc ncee [LRV [LRV]] It is that portion of the Labour Cost Variance which is due to the difference between the Standard Rate specified for the Actual Output and the Actual Rate paid. Labour Rate Variance is said to be favourable when the actual rate is less than the standard rate and adverse when the actual rate is more than the standard rate. LRV = (SR – AR) x AH 4. Veri Verifi fica cati tio on Labour Cost Variance = Labour Efficiency Variance + Labour Rate Variance i.e. LCV = LEV + LRV
Standard Costing
1. Given the the cost standa standard rd for material material consump consumption tion are 40 40 kg. @ Rs. Rs. 10 per kg. kg. Compute the material variances when actuals are: a. 48 kg @ Rs.10 per kg. b. 40 kg @ Rs.12 per kg. c. 48 kg @ Rs. 12 per kg. d. 36 kg for a total cost of Rs.360. 2. Gemini Gemini chemical industr industries ies provide provide the followin following g information information from from their records. records. For For making 10 kgs of GEMCO standard material requirement is : Material Quantity (kg) Rate per kg(Rs.) A 8 6.00 B 4 4.00 During April 1000 kg of GEMCO were produced. The actual consumption of materials is as under: Material Quantity (kg) Cost (Rs.) A 750 5250 B 500 2500 Calculate material variances 3. Using the following following information information of departm department ent X, calculate calculate all possib possible le labour labour variances. Actual wage rate per hour Rs.3.40 Standard hours for production 8640 hours Standard rate per hour Rs.3.00 Actual hours worked 8200 hours. 4. The standard standard cost cost card for one unit unit of a product product shows the the following following costs costs for material material and labour: Material 4 pieces @ Rs. 5.00 and Labour 10 hours @ Rs.1.50 5700 units of product were manufactured during the month of March 2002 with the following material and labour costs: Material 23000 pieces @ Rs.4.95 and Labour 56,800 hours @ Rs.1.52 Calculate material and labour variances. 5. The standa standard rd cost cost card of a product product shows shows the the following following Material cost Rs.5 for 2 kg. and Wages Re. 1.00 for 2 hours. The actual which have emerged from business operations are as follows: Production: 8000 units. Material consumed worth Rs.39600 for 16500 kg. and wages paid Rs.7200 for 18000 hours of work. Calculate appropriate material and labour variances.
