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Hi, I’d appreciate your help on the below, I just can’t work it out:
1. 10800 hours actually worked and paid 8770$. If the rate v. Is $706 adv. the efficiency v. is $256, and 5000 units were produced, what is the standard production time per unit??2. Direct labour 0.5h x $12 = $6
710 units were produced in the period and staff worked 378hours at a total cost of $4725. Of these hours 20 were lost due to a material shortage. What is the labour efficiency variance?Thank you soo much in advance for sorting this out!
1. Since the rate variance is 706 A, the standard cost of the actual hours must be 8770 – 706 = 8164
Since this is for an actual 10800 hours, the standard cost per hour must be 10800/8164 = 0.75.Since the efficiency variance is 256, they must have worked 256/0.75 = 341 hours more or less than they should have, for produrion of 5,000 units (you have not said whether the efficiency variance is adverse or favourable.
(Check you have copied the question correctly because it is unusual in the exam for the numbers not to divide exactly)
2. The standard time for 710 units is 710 x 0.5 = 355 hours
They actually worked 378 – 20 = 358 hoursTherefore the efficiency variance is (358 – 355) x $12 = $36 adverse
Hallo,
Thank you very much for your answers.
Regarding question nr 1. – the efficiency variance is 256 favourable, and the actuall hours worked – 10080 – apologise for the confiusion.
Could you please explain the first question with the above data?
Thank you very much in advance.
Kind regards,
Agnieszka
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