Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › excess idle time variance
- This topic has 1 reply, 2 voices, and was last updated 5 years ago by John Moffat.
- AuthorPosts
- February 12, 2019 at 12:27 pm #504887
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 AdvMy 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.
February 12, 2019 at 5:28 pm #504928I 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.
- AuthorPosts
- You must be logged in to reply to this topic.