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TYU – 21, Chapter Advanced Variances Kaplan Book
Question: The direct labor efficiency variance in respect of a new product has been calculated as $14,700 Favourable. The variance was calculated using standard cost data which showed that each unit of the product was expected to take 8h at $15/h.
Actual output: 560
Actual time: 3500 hours
At: $57,750.
Production manager learns that standard time 8 hours was time taken to produce first unit and that learning curve of 90% should have been anticipated for the first 600 units.Calculate planning and operational efficiency labour variance, recognising learning curve effect(b= -0.1520 for a 90% learning curve)
My question: how to implement learning curve effects in questions?
You use the learning curve formula to calculate a revised standard time per unit, and then you can calculate the planning and operational variances in the normal way.
Have you watched my free lectures on learning curves and on planning and operational variances? The lectures are a complete free course for Paper PM and cover everything needed to be able to pass the exam well.
I haven’t the lecture on learning curve, will take soon and hopefully my query will be resolved. Thanks.
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