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Hi John,
The question was to calculate operational lab efficiency and following data was given:
DIY uses skilled staff to operate that converts raw maerial into finished product. the standard direct labour hours for each 100 liters of white paint is 8 direct labour hours @$24 per hour.
During Feb 640 direct hours were worked at a cost of $16500. it is now realised that a new wage rate of $26 per hour had been agreed with the workers. A total of 7800 liters of paint was produced in feb.
ii) calculate operational labour efficiency variance.
I got adverse $384 as the answer. Its given 3840 as favorable. Can you pls clarify this. Many thanks!!Are you sure that you have copied the question correctly?
If you have then there is a typing error in either the question or the answer in your book (if it is in the BPP Revision Kit, or in a past exam, then tell me the number of the question and I will check).
The correct answer is $384 adverse.
For the 7,800 litres produced, they should have taken 7800/100 x 8 = 624 hours.
They actually took 640 hours, which is 16 hours too much. 16 hours x $24 per hour = $384.
it is from the CBE mock exam paper. I did check it myself so many times that i m sure the number written there is 3840.
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