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.
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std labour rate $14/hr
std hr =3hr/unit
actual prod.=12600u
actual hr taken=37000hr
total lab. cost=$531930
revised std rate=14.28/hr
revised std hr=3.25
Required:
calculate the all posible planning and operational variances.my calculation was:
planning variance:
efficiency:
(sh x sr) – (rsh X sr) =
(12600x3x14)-(12600×3.25×14)=44100A
ans given 44100A.(no problem)
rate planning var:
(rsh x sr) – (rsh x rsr)=(12600×3.25×14)-(12600×3.25×14.28)=11460A
ans given 10360A***(problem)
operational var:
efficiency:
(rsh x rsr) – (ar x rsr)=(12600×3.25×14.28)-(37000×14.28)=56400F ans given 55300F***(problem)
rate:
(ar x rsr) – (ah x ar)=(37000×14.28)-531930=3570A ans given 3570A*** no problem
sir plz tell me,what went wrong..
and is it ok to calculate in this way?There are two ways of calculating planning and operational variances, which are both valid but give different answers.
The previous examiner preferred one way, but the current examiner prefers the other way.
My lectures now do it the way that the current examiner prefers (which is also the easiest way). Most current editions of revision kits do it this way also (although old editions do it the other way).
However, the examiner will always accept either way (even though the answers are different).
Hi Sir,
Yes we have agreed that there are 2 methods.
But this method does not reconcile to the basic variances.
For instance the planning + operational efficiency variance Will not give the efficiency basic variance. May be that is why the New examiner prefers the way it is done in the lecture. Please clarify.Thanks
DanielThat is quite correct – they do not add up to the total.
And yes, that is why the current examiner prefers the way in the lecture.
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