The correct answer is: A. Standard cost of labour – actual cost of labour.
The total labour cost variance is the difference between the standard cost of labour and the actual cost of labour. The standard cost of labour is calculated by multiplying the standard rate per hour by the standard time allowed for the job. The actual cost of labour is calculated by multiplying the actual rate per hour by the actual time worked.
Option B is incorrect because it uses the standard time for actual output, which is not the same as the standard time allowed for the job. Option C is incorrect because it uses the standard rate for actual output, which is not the same as the standard rate per hour. Option D is incorrect because it uses the actual time taken, which is not the same as the actual time worked.
Here is a more detailed explanation of each option:
- Option A: Standard cost of labour – actual cost of labour. This is the correct answer because it is the only option that correctly calculates the total labour cost variance. The standard cost of labour is calculated by multiplying the standard rate per hour by the standard time allowed for the job. The actual cost of labour is calculated by multiplying the actual rate per hour by the actual time worked. The total labour cost variance is the difference between the standard cost of labour and the actual cost of labour.
- Option B: Standard rate (standard time for actual output – actual time worked). This option is incorrect because it uses the standard time for actual output, which is not the same as the standard time allowed for the job. The standard time for actual output is the time that it actually took to produce the output, while the standard time allowed for the job is the time that it should have taken to produce the output.
- Option C: Standard rate (standard time for actual output – actual time paid for). This option is incorrect because it uses the standard rate for actual output, which is not the same as the standard rate per hour. The standard rate for actual output is the rate that was paid for the actual output, while the standard rate per hour is the rate that should have been paid for the output.
- Option D: Actual time taken (standard rate – actual rate). This option is incorrect because it uses the actual time taken, which is not the same as the actual time worked. The actual time taken is the time that it actually took to complete the job, while the actual time worked is the time that the employee was paid for working on the job.