Advanced. DB manufactures and sells e-readers. The standard labour cost per unit of the product is $7.
Question:
Advanced. DB manufactures and sells e-readers. The standard labour cost per unit of the product is $7. Each unit takes half-an-hour to produce at a labour rate of $14 per hour. The budgeted production for August was 20000 units.
The production director subsequently reviewed the market conditions that had been experienced during August and determined that market labour rates were $17.50 per hour. The actual production was 22000 units. Actual labour hours worked were 11.400 hours at $15.50 per hour.
Required:
Calculate the following variances for August:
(i) The labour rale planning variance.
(ii) The labour rate operational variance.
(iii) The labour efficiency operational variance.
(4 marks)
CIMA Performance Operations
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