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The information is taken from the standard cost card of the product
Budgeted production 5100 units
Direct wages 2 hrs at $2.00 per hrs
Variable overhead 2 hrs at $0.30 per hrsActual results are as follows
Actual production 4850 units
Labour hrs are paid for amounted to 8500 hrs at a cost of $16800
Actual operating hrs amounted to 8000 hrs
Variable overhead amounted to $2600Calculate the labour rate and efficiency varinace and variable overhead expenditure and efficiency varinace
There is no point in setting me a test question!! You should have an answer in the same book in which you found the question, so ask about whatever it is in the answer that you are not clear about and then I will explain.
This is a very easy question and the variances are explained in detail in my free lectures on variances. The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.
The answer Is not given. Actually I am confused whether to take Operating hrs or total hrs for calculation
You should be using a Revision Kit from one of the ACCA Approved Publishers – they have answers and working.
For the labour rate variance you use actual hours paid. For the labour efficiency variance you use actual operating hours.
For the variance overhead variances you use actual operating hours for both.
This is all explained in my free lectures on variances.
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