Hello sir, i really need your help on specimen paper secton B, Q2, i’ve watched your lecture on variance analysis and labour Efficiency variance was calculated as follow ( the difference between actual hours worked and standard hours for actual production multiply by standard cost per hour) so when i did the calculation i got the asnwer D =(150,000-(C9*6))*8 , i’ll be very grateful if you could tell what did i do wrong

It is a bit of a trick question. What you have written would be correct except that it gives a negative answer, which would mean an adverse variance when it should be a favourable variance.

The correct answer is C, because C9 x C4 gives actual production at standard hours at standard cost and 150,000 x 8 gives actual hours at standard cost.

japime says

will the actual exams really ask us for explanations on part B or are these only present on practice tests?

sam says

Hello sir,

i really need your help on specimen paper secton B, Q2, i’ve watched your lecture on variance analysis and labour Efficiency variance was calculated as follow ( the difference between actual hours worked and standard hours for actual production multiply by standard cost per hour) so when i did the calculation i got the asnwer D =(150,000-(C9*6))*8 , i’ll be very grateful if you could tell what did i do wrong

Thanking you in anticipation

John Moffat says

It is a bit of a trick question. What you have written would be correct except that it gives a negative answer, which would mean an adverse variance when it should be a favourable variance.

The correct answer is C, because C9 x C4 gives actual production at standard hours at standard cost and 150,000 x 8 gives actual hours at standard cost.