Actual labour rate — OpenTuition Forums

DDiksha4y ago

Hello Sir, Can you please help me with the third part of this question? M Co is a small manufacturing company. The following information is available: Budgeted Labour rate per hour $4 Fixed overhead absorption rate per hour $2.50 Actual Hours worked 3,000 hours Fixed overheads $9,000 Variances Labour rate 300 favourable Fixed overhead expenditure 200 favourable Fixed overhead efficiency 500 adverse Required: (a) Using the information available, calculate: (i) the budgeted fixed overhead expenditure and state if the fixed overhead capacity variance would be favourable or adverse. (2 marks) (ii) the labour efficiency variance (2 marks) (iii) the actual labour rate per hour My fixed overhead expenditure variance is $9200 And Capacity Variance is $1700 adverse. Thank you in advance

John MoffatTutor4y ago#1

The budgeted fixed overheads are $9200 (not the expenditure variance). The fixed overhead volume variance is $1700 adverse, and therefore the fixed overhead capacity variance is 1700 - 500 = $1200 adverse The standard labour rate is $4 per hour. They worked 3,000 hours and had a favourable labour rate variance of $300. Therefore the paid 300/3,000 = $0.10 less than the standard rate, and so actually paid $3.90 per hour. (But why are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers - they have answers and workings.)

DDiksha4y ago#2

Thank you so much sir, The revision kit did had answer but they did not show the working for the above question.

John MoffatTutor4y ago#3

You are welcome.

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