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Hi tutor,
I have a question and I hope that you will guide me 🙂
Here’s the question:XYZ uses standard costing. The following data relates to labour grade II:
Actual hours worked………………………………………………………………….10,400 hrs
Standard allowance for actual production………………………………………8,320 hrs
Standard rate per hour…………………………………………………………………..$5
Rate variance (adverse)…………………………………………………………………$416What was the actual rate of pay per hour?
I saw that they take the “rate variance/actual hours worked” $416/10,400 = 0.04 then plus standard rate per hour $5 = $5.04 (Actual rate of pay per hour)
I just don’t get it, how do they do that? And is there any other ways to work it out? Or just the way they do it?You can set out the working in a different way, but there is only the one basic approach, which is using the normal variance rules ‘backwards’.
I assume that you have watched my free lecture on variances, and so you know that the labour rate variance is the difference between ‘actual hours at actual rate’ and ‘actual hours at standard rate’.
We know that the actual hours at standard rate = 10,400 x $5 = $52,000
The variance is 416 adverse, so it means that actual hours at actual rate = 52,416So actual rate must be 52416 / 10400 = $5.04
Hi tutor,
It’s me again :), this time I’m here with a question: “Last month the standard contribution sales was $10,000 and the following variances arose:
Total variable costs variance……………………………….2000 (A)
Sales price variance……………………………………………500 (F)
Sales volume contribution variance……………………….1000 (A)What was the actual contribution for the last month?”
What I think the answer is 10000 – 2000 + 500 – 1000 = $7,500.
But the answer actually is $8,500 ( 10000 – 2000 + 500 ), so why don’t we keep subtracting it by 1000?
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