Advanced: Labour planning and operating variances A standard costing and budgetary control system which provides management with a range of plan¬ ning and operational variances for each four week accounting period should facilitate improved feed¬ back control information which may then be used for improved feedforward control.

(a) Explain the meaning of the terms planning and operational variances, feedback control and feedforward control. (6 marks)

(b) Explain and illustrate with reference to direct labour cost variances, ways in which a plan¬ ning and operational variance analysis could provide management with

(i) additional feedback control information

(ii) additional feedforward control inform¬ ation. (14 marks)

Use the following direct labour cost information for any illustrative content of your answer.

Original standard per product unit: 0.4 hours Original wage rate per hour: £4 Budget output per month: 1000 units Actual results for January:

Output: 1000 units; direct labour hours incurred: 420 hours at £4.50 per hour.

At the end of January it'has been established that the original standard time allowance per unit was understated by 10%. In addition, the completion of negotiations with the trade union has resulted in a wage rate of £4.25 being agreed from 1 January.