Standard Hours

xSamx

Think i am just being silly now but im getting my head around all the variances but i cant seem to understand how to work out standard hours?

Any help would be appreciated!!

SandyHood

Standard hours is a measure of output, not time.
Every unit produced has a standard time e.g. 1.5 hrs
So if you produce 200 units then you can say 300 standard hours were produced.
Any difference between the standard hours produced and the actual hours worked would give rise to an efficiency variance.

definite.studies

Yes and another term for output is volume of production, so the difference between standard hours produced and budgeted hours gives rise to the volume variance when converted to a monetary value.

The difference between budgeted hours and actual hours gives rise to the capacity variance in the same way.

Because more production output means more fixed cost recovered, whenever the actual or standard hours are greater than budgeted hours this gives rise to favourable capacity and volume variances respectively.