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Hello,
I was reviewing my answers for the Revision mock exam and I sumbled into the following question :A company has a budgeted lab. cost of $ 180K for the production of 30K units per month.
Each unit is budgeted to take 3h of labour.Actual labour cost was $ 160K for 28K units with 85K hours worked.
What is the labour efficiency variance?
My calculation was :
Act h. worked 85K vs. h. for the actual production ( 28K x 3h = 84K) @ std. labour cost p.u. ( 180K/30K/3h=2$) and this should give us 2000 Adverse ( more h worked than the ones for the standard production)
But the answer in the mock exam is 2000 F.
Did I miss to include something in my calculation that would get me to 2K F?
Many thanks.
Cristina
I do apologise – you are correct, the answer should be $2,000 adverse.
(I thought that I had corrected this, but obviously not. I will do now. Sorry 🙁 )
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