consider total time spent on a job 8500
however 500 was idle time
so when we calculate variances
Labour rate = take 8500
labour efficiency = take 8000
idle = 500 x st rate
variable oH =do we calculate on 8500 or 8000
fixed oh= do we calculate on 8500 or 8000
For variable overheads and fixed overheads capacity and efficiency variances, you use the actual hours worked (8000). Idle hours paid are irrelevant for overhead variances – we assume that no overheads are incurred during idle hours.
many thanks…thts wht i needed. quick answers for my all little little questions. thanksalot again
You are welcome.
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