- This topic has 3 replies, 2 voices, and was last updated 4 years ago by
.
- Posts
Hi sir.
In example 2 of more variance on page 58 of lecture notes. the increased in rate of pay ultimately gives an adverse figure at planning level. the operational will entirely mean it is the managers fault to spend more than the revised value…hope that is cool.
secondly, looking at the revised time per unit we would have taken less time for the actual production(revised) hence favorable figure at planning. now that the actual hours exceeds the revised at operational level, would that possibly mean there is idle time that we paid for or the workforce were inferior quality(but we did raised their wage to motivate them)? or what other factors could possibly yield low efficiency?thanks in advance, john.
The adverse operational efficiency variance does mean that they took longer to produce the items than they should have.
This could indeed be because they were being paid for time that they were not actually producing (due perhaps to a machine breaking down), it could be due to the workers simply being slower than they were supposed to be, it could be that the revised standard time per unit was unrealistic (and therefore wrong), or it could be that many workers left and were replaced and that the new workers had not had time to become as efficient as they were expected to be.
- You must be logged in to reply to this topic.