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Truffle Co makes high quality, hand-made chocolate truffles which it sells to a local retailer. All chocolates are made
in batches of 16, to fit the standard boxes supplied by the retailer. The standard cost of labour for each batch is $6·00
and the standard labour time for each batch is half an hour. In November, Truffle Co had budgeted production of
24,000 batches; actual production was only 20,500 batches. 12,000 labour hours were used to complete the work
and there was no idle time. All workers were paid for their actual hours worked. The actual total labour cost for
November was $136,800. The production manager at Truffle Co has no input into the budgeting process.
At the end of October, the managing director decided to hold a meeting and offer staff the choice of either accepting
a 5% pay cut or facing a certain number of redundancies. All staff subsequently agreed to accept the 5% pay cut
with immediate effect.
At the same time, the retailer requested that the truffles be made slightly softer. This change was implemented
immediately and made the chocolates more difficult to shape. When recipe changes such as these are made, it takes
time before the workers become used to working with the new ingredient mix, making the process 20% slower for at
least the first month of the new operation.
The standard costing system is only updated once a year in June and no changes are ever made to the system outside
of this.
Required:
(a) Calculate the total labour rate and total labour efficiency variances for November, based on the standard cost
provided above.sir in the examiner ans std price = $6/.5 = 12.
sir i can,t understand the std price$12 of the examiner answer the examiner how to calculate the ans.I think you are actually asking about the standard rate of pay!
Each batch takes 1/2 hour to make.
The standard cost of labour is $6 per batch.So it must mean that the standard rate of pay is $12 per hour.
(The cost per batch is 0.5 hours x $12 per hour = $6. It is just working ‘backwards’)
Regarding this question sir,i dont understand part(b)”Analyse the total labour rate and total labour efficiency variance into component parts for PLANNING & OPERATIONAL VARIANCES but i dont understand how they got their answer because i used “ACTUAL HOURS ACTUAL RATE;ACTUAL HOURS STANDARD RATE;STANDARD HOURS STANDARD RATE.and i flexed the actual of 20,500 to the revised and budgeted but i still did not get the same answer and why did the answer use “12,000 hours” shouldnt we use 20,500 batches?because in material we use units not the hours so i dont understand and i am very confused please help me.i can do all other variance question but i cant do this one especially part (B)
The problem is that there are two ways of dealing with Planning and Operational variances.
There is the sensible way (and the way that Kaplan, BPP, OpenTuition, and the examiners article from a few year ago, do it), and there is another, not so sensible, way (the way that the examiner did her answer to Truffle).However, the examiner did say that both methods would get full marks – even though they give different answers.
Best is for you to look at my answer to that question.
You can find it here:
https://opentuition.com/acca/f5/f5-december-2012-question-2-planning-and-operational-variances/Thank you so much i watched the lecture.thank god i thought i didnt understand variances anymore
Truffle Co makes high quality, hand-made chocolate truffles which it sells to a local retailer. All chocolates are made
in batches of 16, to fit the standard boxes supplied by the retailer. The standard cost of labour for each batch is $6·00
and the standard labour time for each batch is half an hour. In November, Truffle Co had budgeted production of
24,000 batches; actual production was only 20,500 batches. 12,000 labour hours were used to complete the worksir i dont understand what do mean by in batches of 16 do we divide 24000 batches/16
could you tell me when to divide not to divide
when batches are given how to understand it per batchThey are batches of 16. It means that if 16 chocolates fit into a box, then making one batch (like making one box) is making 16 chocolates.
So if we make 10 batches (10 boxes) it means we will be making 160 chocolates, and so on.Component 1 (Circuit board) – these are bought in and cost $4·10 each. They are bought in batches of 4,000 and
additional delivery costs are $2,400 per batchis this mean 1batch (or box) fit 4000 circuit board. therefore
$2400 is per batch and 4000 is per bactch and to calculate per unit
2400/4000batchesis it correct sir?
Well it would help if you were to say what you needed help with!
Presumably variances since you have posted this under a question about Paper F5 variances?
hi
the vailable papers on acca website is until june 2013 only sir can you please advice me how to get the dec 2012
thank uMost of them are still on the ACCA website but are hidden. If you use Google to search for the relevant exam then you should be able to find it.
However, you can find relevant past questions if you buy a Revision Kit from one of the ACCA approved publishers. It really it vital that you do buy one because the contain lots of exam standard questions (and in the new exam format) and practice is essential if you are to pass the exam. Just attempting past questions is not enough.
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