Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Advanced idle time variance.
- This topic has 3 replies, 2 voices, and was last updated 3 years ago by John Moffat.
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- December 27, 2020 at 6:33 pm #600997
Dear John,
How are you?
I hope you are doing well,
I would like to ask you about point#d in example 5 which is related to calculate idle time and efficiency variance actually sir I have seen your nice lecture but still have confusion about using $6 as standard direct labour rate in calculating those previous two Variances instead of $5.70 per hour.
Take into consider that you have calculated rate of pay variance using $5.70 per standard direct labour hour.
My question in brief,
Why did you use $5.70 in calculation of rate of pay Variances and didn’t for both of idle time and efficiency variance?Thank you in advance.
December 28, 2020 at 8:21 am #601030The rate of pay variance is checking whether or not the correct rate per hour is being paid. The standard pay rate is $5.70 and we check whether we actually paid more or less than that amount.
The standard cost per working hour is $6.00, and so when checking whether or not we worked the correct number of hours (whether because of a change in efficiency or a change in the idle time) we cost out at the standard cost per hour worked.
December 28, 2020 at 7:20 pm #601081Thank you John.
December 29, 2020 at 7:48 am #601098You are welcome 🙂
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