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excess idle time variance

RReem7y ago
Question: Zost co is analysing the data for month 3 when the company is expecting the average level of idle time to be 20% of the hours paid. the 90% learning curve arose only for the first 400 units and in month 3 when a steady state is achieved. when 401-650 units were produced, the company paid for 5250 hours and the workforce worked 4500 hours. The standard cost for labour is $5/hr and 40 hours per unit. calculate the labour efficiency variance. In the Kaplan book they have calculated the variance as follows: 4500*6.25 = 28125 std time per unit = 40*400^b = 16.09 hrs/unit 16.09 * 6.25 * 250 = 25141 LEV = 28125-25141 = 2984 Adv My doubt is that why have they not taken the time for 401-650 unit (which is 250 units) at the 400th unit which is calculated by taking the time for 400 units minus the time for 399 units, as in the question it says that the learning curve arose only for the first 400 units and we are finding the efficiency variance for 401-650 units produced in month 3.
John MoffatJohn MoffatTutor7y ago#1
I have not got the Kaplan book (only the BPP Revision Kit), but assuming that you have copied out the question correctly it would seem that there is a mistake in the answer because they should have used the time for the 400th unit calculated the way that you have written.
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