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Hi I am a little bit confused and cannot work out the answer to this question..
Labour efficiency rate adverse $1800
Budget labour h. 2150
number of hours per units 4h
cost per unit 12$
How many units were actually produced?
I have made my calculation and the answer should be 575!
1800:12:4= 37.5 units
2150:4= 537.5 units
TOT UNITS PRODUCED: 575..
Is it correct? I am feeling totally confused at the moment..too many information to remember.
Thanks for any explanation
Hi there!
Dont despair – yes I agree with you the answer is 575.
Its a badly worded question : the ‘budgeted labour hours’ should really be referred to as ‘Standard labour hours for actual production’.
Also the 4 hours per unit should state this is actual hours pu and not standardIn order to calculate this (see below).. you find the bottom line first because all numbers are known here — then add on the 1800 adverse variance to find the total for the top line, You know this total is sum of actual hours x actual rate.
Through elimination you can find units via… $27600 divided by 12 then divided by 4 = 575 units.
ThereforeAH AR
4hs x ? * $12 = 27600
1800Adv
SH AR
2150hrs * $12 = 25800Answer ‘?’ is 575 units
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