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According to the text book (BPP) when calculating labour efficiency operational variance it is multiplied by the revised standard rate, however, I have noticed based on past papers the standard rate is used. Which is the correct one?
You are referring to the question in last December’s exam – it is the only time planning and operational variances have been asked for labour.
There are two ways of calculating planning and operational variances, and they give different answers. The way that BPP (and Kaplan and ourselves) do it is the way that a previous Student Accountant article did it (and the most sensible way!).
The examiners answer to the December question did it the other (less sensible) way, but did make it clear that doing it the other way would get full marks (even though it gives a different answer).
If you want to see the answer done the way BPP and ourselves do it, then you can find a link to it from the main F5 page on this website.
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