Professional labour variances, efficiency comparisons. (25-30 minutes) Sharmila Khan is manager of Self-Assessment Tax Experts, a firm that provides assistance in the preparation of individual tax returns.

Because of the highly seasonal nature of her business, Khan employs staff on a monthly basis from two accounting placement firms—Professional Assist (PA) and Office Support (OS). In July 2000, Self-Assessment Tax Experts took on 12 staff members from PA and 10 from OS. PA is the prestige firm in its area. OS is a recently formed firm.

Khan budgets the following for July 2000: bhyt6

REQUIRED 1. Calculate professional labour price and efficiency variances for

(a) the 12 PA staff,and

(b) the 10 OS staff employed in July 2000.
2. Comment on the efficiency of the PA and OS staff Self-Assessment Tax Experts employed.
3. What factors other than efficiency might Khan consider in deciding whether to employ staff from PA or OS?

Transcribed Image Text:

Budgeted hourly rate Budgeted time per tax return in hours Actual results for July 2000 were as follows: PA OS STAFF STAFF 45 40 0.40 0.50 PA OS STAFF STAFF Actual hourly rate 548 42 Actual time per tax return in hours 0.42 0.46 Number of tax returns completed 4,608 3,600