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Forums › ACCA Forums › ACCA MA Management Accounting Forums › Labour rate variance
Can someone please help me with this, I don’t understand how they got 2hrs
Mark has the following results:
10,000 hours actually worked and paid costing $126,000.
If the rate variance is $1400 adverse, the efficiency variance $498 favourable and 5020 units were produced, what is the standard production time per unit?
In future, you must ask in the Ask the Tutor Forum if you want me to answer – this forum is for students to help each other.
The standard cost for the 10,000 hours actually worked must be 126,000 – 1,400 = 124,600.
Therefore the standard cost per hour must be 124,600 / 10,000 = $12.46
Since the efficiency variance was $498, they must have worked 498/12.46 = 40 hours less than expected.
Therefore the 5020 units were expected to take 10,000 + 40 = 10,040 hours.
Therefore the standard time per unit = 10,040 / 5,200 = 2 hours.
Sir, if 40 hours was less than expected then how many hours were expected because I taught since efficiency variance was favorable, it therefore means they have worked faster . 10000 hours were actually worked .
If you are wanting me to answer then you must ask in the Ask the Tutor Forum (read my previous reply).