Forums › ACCA Forums › ACCA PM Performance Management Forums › Variance – backwards
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- December 4, 2016 at 8:37 pm #353838
Hi
Can someone help me please, I can’t seem to figure out how to answer this question.
Total labour variance $6,050 A
Each plasma TV uses 2 standard hours of labour and each LCD TV uses 1·5 standard hours of labour. The standard cost for labour is $14 per hour and this also reflects the actual cost per labour hour for the company’s permanent staff in November. However, because of the increase in sales and production volumes in November, the company also had to use additional temporary labour at the higher cost of $18 per hour. The total capacity of Carad’s permanent workforce is 2,200 hours production per month, assuming full efficiency. In the month of November, the permanent workforce were wholly efficient, taking exactly 2 hours to complete each plasma TV and exactly 1·5 hours to produce each LCD TV. The total labour variance therefore relates solely to the temporary
workers, who took twice as long as the permanent workers to complete their production.Thanks
Jefzen2610
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