I want to clear one point regarding labour efficiency variance in part a ( iii )
That why the difference of 275 hours is multiplied with $14 and not with $ 18
although the tempotay labour is being paid higher i.e @$18
Sorry my mistake its a question from december 2010 not 2012
Once again I apologize
The rate variance looks at the difference between the actual rate and the standard rate.
However the efficiency variance is only looking at the gain or loss due to the hours worked being less or more than budgeted. It is always costed out at the standard rate.
Thank you so much now I got it that efficiency variance has to be valued
On standard rate
You are welcome
You must be logged in to reply to this topic.