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from the mock exam.
A company has a budget labour cost for production of 60000 units per month. Each units budget to take 3hrs of labour.
The actual cost during the month was $320,000 for 28000 units and 85000hrs were worked.
calculate the labour efficieny variance.my working: 360000/60000=6
3hrs * $6=1828000*18=504,000
85000*6= 510,000
my answer=6000A
CORRECT ANSWER 2000APLEASE EXPLAIN, WHAT AM NOT DOING CORRECTLY
Please – if you want me to answer then ask in the F2 Ask the Tutor Forum. This forum is for students to help each other 🙂
(and please do not type in capital letters!)I have the question in front of me and you have copied it wrongly. It actually says:
A company has a budgeted labour cost of $360,000 for the production of 60,000 units per month.
Each unit is budgeted to take 3 hours of labour.
The actual labour cost during the month was $320,000 for 28,000 units, and 85,000 hours were worked.
What was the labour efficiency variance?The standard cost per unit is 360,000 / 60,000 = $6 .
The standard time per unit is 3 hours.
So the standard cost per hour is $2.We actually worked 85,000 hours.
The standard hours for the actual production is 28,000 x 3 hours = 84,000 hours.So we took 1,000 hours too long and the efficiency variance is therefore 1,000 hours x $2 per hour = $2,000 (adverse)
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