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Hi John,
Im struggling on the above, im using the kaplan method to work variances and i cant seem to understand and work part iii the labour rate and labour efficiency. How did you get the 275 x 2? also this is the layout i use and put the amounts in, please could you help. How did you work out the standard hours worked? and the standard rate?
I do my variances like this:
Actual Hours x Actual Rate = xxxxx
Labour rate
Actual Hours x Standard Rate = xxxx
labour efficiency
Standard Hours x Standard Rate = xxxxI hope im making sense and you know this method.
The standard hours (for actual production) are calculated as follows:
Plasma: 750 x 2 hours; LCD 650 x 1.5 hours; Total standard hours = 2475Actual hours: The permanent workers were ‘perfect’ but they were limited to 2,200 hours. The extra hours were by temporary workers (so they should have been 275 hours) but they took twice as long as they should have done, so they took 275 x 2 = 550 hours.
So the total actual actual hours were 2200 + 550 = 2750 hours.The standard rate was $14 per hour.
The actual total labour cost was 2,200 x 14 (for the permanent workers) + 550 x 18 (for the temporary workers. So total labour cost = $40,700.
Now you should be ably to calculate the variances 🙂
(Sorry but I do not like learning the ‘Kaplan rules’. The examiner always tries to check that you understand what you are doing and that you have not simply learned rules.)
I dont like their learning rules either, its very robotic and dont understand them. We were told the formula and then told to slot the numbers in, whereas your lectures you explain it and have easier rules/methods.
Thank you totally get this now…. thank you again for all the hard work and helping us!!!
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