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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Revision Mock Exam Variance Question
A company Produces units that should take 1.5 hours to make. The std rate of pay is $15 per hour. Idle time is expected to be 10% of hours paid.
They Actually produce 20000 Units. They pay $5,20,000 for 38000 hours, of which 3000 hours are idle.
What is the labour Efficiency Variance?
1)$83333 A
2)$75000 A
3)$80000 A
4)$120000 A
The answer in the test $83333.
I dont understand how.
Labour efficiency variance is the difference between actual hours worked and the hours that shouldve been worked.
Thus, 38000 hours – 3000 hours= 35000 hours actually worked
Standard Actual= 20000*1.5=30000 hours of which 10% is idle time. Thus hours worked is 27000. The difference is 8000 hours and monetary value is $120000.
Am i going wrong?
Thanks
Please don’t ask the same question twice.
I have answered your first post of the question.