- This topic has 3 replies, 2 voices, and was last updated 8 years ago by
.
- Posts
Budget prodn 13120 units
Budget fixed overhead $45920
Budget labour hours 26240
Actual prodn 12920 units
Actual fixed overhead $48400
Actual labour hours 25200what is the fixed overhead efficiency variance?
It was there on mock test of MCQ but could not get the correct answer
Please help meThe standard cost per hour = 45920/26240 = $1.75 per hour.
The standard hours per unit = 26,240/13,120 = 2 hours per unit.
The actual hours worked – 25,200. The standard hours for the actual production = 12,920 x 2 hours = 25,840 hours.
Therefore they worked 640 hours faster than expected.
Therefore the variance = 640 x $1.75 = $1,120 (favourable).I do suggest that you watch our free lectures on variances. Our lectures are a complete course for Paper F5 and cover everything needed to be able to pass the exam well.
- You must be logged in to reply to this topic.