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Standard costing

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Standard costing

  • This topic has 3 replies, 2 voices, and was last updated 2 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • August 12, 2022 at 2:08 pm #662958
    Sukuna
    Participant
    • Topics: 25
    • Replies: 37
    • ☆☆

    A company’s standard labour rate for its factory workers is set at 5$ per hour.

    The standard time allowed for producing one unit is 20 minutes.
    During the period 4,800 units were produced and the factory workers were paid $5.25 per hour. The actual hours worked were 1,560.

    What was the total labour cost variance?

    solution:

    1560X5.25$ = 8190
    1560X5$ = 7800

    my answer was 390$ (A) Adverse

    but they did absolutely something different:

    Aq X Ap 1560 X 5.25 = 8190
    Sq X Sp 4800X20/60X5$ = 8000

    the answer:190 (A)

    I am never did something like this as I know we are always “comparing ” Aq X Ap vs Aq X Sp or Aq X Sp vs Sq X Sp.

    But I never happen to see when it comes to figuring out variance to “compare” Aq X Ap vs Sq X Sp….

    Why is that so? Can you show me a full picture of doing so ?

    thanks in advance

    August 13, 2022 at 8:17 am #663007
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54711
    • ☆☆☆☆☆

    The question is asking for the total labour variance (not for the breakdown between the rate variance and the efficiency variance).

    Have you watched my free lectures on this?

    August 14, 2022 at 4:04 pm #663064
    Sukuna
    Participant
    • Topics: 25
    • Replies: 37
    • ☆☆

    yes, I watched I am revising it now maybe I forget about that. Thanks a lot, Sir.

    August 14, 2022 at 4:24 pm #663071
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54711
    • ☆☆☆☆☆

    You are welcome .

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Standard costing’ is closed to new replies.

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