- This topic has 5 replies, 2 voices, and was last updated 9 years ago by
.
Viewing 6 posts - 1 through 6 (of 6 total)
- Posts
You are going to have to be more specific – they are two different things and it depends what you are trying to do!
The issue I had this with is the question called Chaff Co. from the June 2008 past paper. The question states that labour is normally paid $18 per hour. Idle time is expected to be 10% of hours paid and is not reflected in the $18 per hour.
Why is 100/90 *$18 used in this case for the labour efficiency variance and idle time variance and not 1.10%*$18?
For every 100 hours that they pay, there will be 10 hours idle and therefore 90 hours worked.
Putting it the other way round, for every 90 hours of work, they need to pay for 100 hours.
So we multiply by 100/90(The free lecture on advanced idle time variances will help you!)
Viewing 6 posts - 1 through 6 (of 6 total)
- You must be logged in to reply to this topic.