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Revision Mock Exam Variance Question

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Revision Mock Exam Variance Question

  • This topic has 1 reply, 2 voices, and was last updated 10 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • September 24, 2015 at 4:53 pm #273420
    vapiano91
    Member
    • Topics: 26
    • Replies: 55
    • ☆☆

    A company Produces units that should take 1.5 hours to make. The std rate of pay is $15 per hour. Idle time is expected to be 10% of hours paid.
    They Actually produce 20000 Units. They pay $5,20,000 for 38000 hours, of which 3000 hours are idle.

    What is the labour Efficiency Variance?
    1)$83333 A
    2)$75000 A
    3)$80000 A
    4)$120000 A

    The answer in the test $83333.

    I dont understand how.
    Labour efficiency variance is the difference between actual hours worked and the hours that shouldve been worked.
    Thus, 38000 hours – 3000 hours= 35000 hours actually worked
    Standard Actual= 20000*1.5=30000 hours of which 10% is idle time. Thus hours worked is 27000. The difference is 8000 hours and monetary value is $120000.

    Am i going wrong?
    Thanks

    September 24, 2015 at 9:11 pm #273442
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54835
    • ☆☆☆☆☆

    Please don’t ask the same question twice.

    I have answered your first post of the question.

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    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • The topic ‘Revision Mock Exam Variance Question’ is closed to new replies.

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