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Variance Analysis

TThomas4y ago
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?
John MoffatJohn MoffatTutor4y ago#1
I would do it the same way as you have done :-)
TThomas4y ago#2
Thanks John, that's reassuring
John MoffatJohn MoffatTutor4y ago#3
You are welcome.
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