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Definition of "standard labour hours"

Forums › ACCA Forums › ACCA MA Management Accounting Forums › Definition of "standard labour hours"

  • This topic has 1 reply, 2 voices, and was last updated 9 years ago by AvatarJohn Moffat.
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  • January 31, 2017 at 3:49 pm #370387
    Avatariworkforcia
    Participant
    • Topics: 10
    • Replies: 5
    • ☆

    I have been doing questions from a source and was asked the calculate the Standard labour hours per unit. I have been studying from the questions here, and Standard labor hours means, budgeted hour for 1 unit multiply by actual number of units produced. I know for a fact I am right, but still need a second opinion. The question is below as follows:

    In a period, 6,500 units were made. There was an adverse labour efficiency variance of $26,000. Workers were paid at $8 per hour which was equal to the standard labour rate. Total wages were $182,000. Calculate the standard labour hours per unit.

    Here’s my solution:

    6500 units should take: (182000-26000)/8 = 19500 hours
    therefore, standard hours per unit= 19500/6500= 3 hours.

    But in the source I am doing from, the answer is 3.5 and here’s how they have shown the solution:

    6500 units shd take 19500 (3hrs)
    6500 units did take 22750 #
    difference 3250 (A) @ $8 = 26000 (A)

    22750 hrs / 6500 units = $3.50.

    Any help is appreciated. Thank You.

    January 31, 2017 at 4:00 pm #370391
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54845
    • ☆☆☆☆☆

    Assuming that you have copied the question correctly, then your answer is correct 🙂

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