Hi John, I wonder if you can help with this one...
Michel has the following results.
10,080 hours actually worked and paid costing $8,770
If the rate variance is $706 adverse, the efficiency variance $256 favourable, and 5,000 units
were produced, what is the standard production time per unit?
A 1.95 hours
B 1.96 hours
C 2.07 hours
D 2.08 hours
I worked out the standard labour cost at standard hours (8770 – 706 = 8064)
Then OAR = 8064/10080 = 0.8
Used the OAR and the efficiency variance (£256) to work backwards to get 320 hours then calculated the standard hours for the production which is 10400
Then divided 10400/5000 to get 2.08
I didn’t understand the workings in Kaplan Exam Kit so mine are different, but I feel I’m over complicating it.
Is there a simpler / quicker way to approach questions like this if one comes up in the exam?
Ask the Tutor ACCA MA
Variance Analysis
I would do it the same way as you have done :-)
Thanks John, that's reassuring
You are welcome.
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