PEV December 2006

confused!!

Hi

I wonder if anyone can help me...

What is the difference between Direct labour efficiency and Fixed overhead efficiency? I seem to always struggle with these ones :mad2:

Also, can anyone helo me understand why on task 1.1 b) the fixed overhead variance, why you have to X by the stadard labour hours per meal (0.25) and the standard usage of materials per meal (0.50) ??

Sorry if I am not making any sense but any help would be appreciated :glare:

SandyHood

Overheads are absorbed on a labour hour basis (in this question).

So the labour efficiency variance is found as the standard rate per labour hour times the difference between the standard labour hours produced less the actual hours worked;

and the fixed overhead efficiency variance is found as the overhead absorption rate times the difference between the standard labour hours produced less the actual hours worked.

These two variance are very closely linked, and if one is adverse the other must also be adverse.

on task 1.1 b) the fixed overhead variance, why you have to X by the stadard labour hours per meal (0.25) and the standard usage of materials per meal (0.50) ??

Has my earlier comment answered this?
The standard hours per meal x the meals produced = standard hours




My PEV revision day closest to Maidstone is on 15 November in London

SandyHood

PEV (MAC) Revision in London

15 November is now full
Bookings can now be made for Sunday 16 November (at the same venue)