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Dear tutor,
I cannot anwser the question 15 of F5 Revision Mock Exam:
A company produces units that should take 1.5hrs to make. The standard rate is $15/hr. Idle time is expected 10% of hrs paid.
They actually produce 20,000 units. They pay $520,000 for 38,000hrs, of which 3,000hrs are idle. What is the labour efficency variance?Please help me to solve it!
BR,
Have you watched the free lecture on advanced idle time variances – if not then I suggest that you do 🙂
(Our lectures are a complete course for Paper F5 and cover everything you need to be able to pass the exam well)The actual hours worked are 38,000 – 3,000 = 35,000 hours
The standard hours for the actual production are 20,000 x 1.5 hours = 30,000 hours.
So they are inefficient by 5,000 hours.These are costed at the standard rate per working hour. The standard rate of pay is $15 per hour, but because of the 10% idle time (and therefore 90% standard working time per unit), the rate per working hour is 15/0.9 = $16.666 per hour.
Therefore the efficiency variance – 5,000 x $16.666 = $83,333 adverse.
1) https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/f5/exampapers/F5-2015-jun-q.pdf
These are 2 Blocks of June 2015 F5 questions. MCQs are included in questions, but there are no answers.
Can anybody help with MCQ answers?
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