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Ypls produces widgets…
They are asking us to calculate labour efficiency Var?
So act hrs @act cost=$ 50000
Std hrs for actual production*(100/95) since Idle time is expected
so (0.5*10800*100/95)*10=56842.105..
So wats the variance is my answer crrt???
Should be crrt coz similar sum is there in kaplan text and they do it this way
Thnks in advance!!You have not said what your answer is?!!!
The correct answer is 2842 (adverse).
Your figure is the standard cost for the standard hours for the actual production.
The standard cost of the actual hours work is ((6,000 – 330) x 100/95 x 10 = 59684
The efficiency variance is therefore: 59684 – 56842 = 2842 (adverse)
(Actual hours at actual cost is 50,000 but this is affected not just by the efficiency variance but also the excess idle time variance and the rate of pay variance)
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