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- August 12, 2022 at 2:08 pm #662958
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$ = 7800my answer was 390$ (A) Adverse
but they did absolutely something different:
Aq X Ap 1560 X 5.25 = 8190
Sq X Sp 4800X20/60X5$ = 8000the 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 #663007The 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 #663064yes, I watched I am revising it now maybe I forget about that. Thanks a lot, Sir.
August 14, 2022 at 4:24 pm #663071You are welcome .
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