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variance analysis

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › variance analysis

  • This topic has 3 replies, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • March 11, 2021 at 9:36 am #614165
    nazmana
    Member
    • Topics: 8
    • Replies: 4
    • ☆

    A company has a standard direct labor cost of $6 for a single unit of production. The standard wage rate is $3 per hour. During May, 1 100 units were produced. Direct labor was paid for 2,500 hours at a total cost of $7,400. Calculate the direct labor efficiency variance for May.

    sir i got the answer like 2400 adverse but the answers are

    1)900(A)
    2)900(F)
    3)888(A)
    4)300(A)
    can you explain me this

    March 11, 2021 at 1:08 pm #614191
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51543
    • ☆☆☆☆☆

    The standard time per unit is $6/$3 = 2 hours.

    The time for the actual production should have been 1,100 x 2 = 2,200 hours.
    The actual time taken was 2,500 hours, which is 300 hours more than it should have been.

    Therefore the labour efficiency variance is 300 hours x $3 per hour = $900 adverse.

    Have you watched my free lectures on this? The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.

    March 15, 2021 at 8:36 am #614446
    nazmana
    Member
    • Topics: 8
    • Replies: 4
    • ☆

    yes sir thank you

    March 15, 2021 at 8:55 am #614451
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51543
    • ☆☆☆☆☆

    You are welcome 🙂

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