PEV help!!!
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GemmaLouise
Registered Posts: 56 Regular contributor ⭐
Hi  abit confused!
I am looking at subdivision of variances!
I know how to work these out  its explaining them thats a bit tricky!
For example:
There is a labour efficiency variance of 890 Favourable so obviously employees have worked faster than anticipated.
The revisied standard is 6.8 hours (reduced 2% from 6.9 hours)
So i did
Standard hours  Revised) x std rate = 1780 F
(13800  13600) x 8.90
So the revised is less than the standard
Actual  Revised x std rate = 890 A
(13700  13600) x 8.90 = 890 A
Which comes back to the 890 F
I know the actual is more than revised so this is adverse and is due to some other factors but what does the standard v revised show  that there were even more efficient than first thought????!!!
Thankyou!!!!
I am looking at subdivision of variances!
I know how to work these out  its explaining them thats a bit tricky!
For example:
There is a labour efficiency variance of 890 Favourable so obviously employees have worked faster than anticipated.
The revisied standard is 6.8 hours (reduced 2% from 6.9 hours)
So i did
Standard hours  Revised) x std rate = 1780 F
(13800  13600) x 8.90
So the revised is less than the standard
Actual  Revised x std rate = 890 A
(13700  13600) x 8.90 = 890 A
Which comes back to the 890 F
I know the actual is more than revised so this is adverse and is due to some other factors but what does the standard v revised show  that there were even more efficient than first thought????!!!
Thankyou!!!!
0
Comments

I'll make up a story along the lines that the standard was set, then the staff received training then the production took place.
So the initial labour efficiency variance was based on the difference between the original standard time x the units produced and the actual time taken
Then the effect of training was taken as one subvariance (as you identified)
Then the difference between the revised standard time for actual production and the actual hours shows the efficiency compared withn the standard based on the new faster time. If this is also favourable that shows either that the training had an even better effect than expected, or that jobs were rushed with a worry about the quality of outout.Sandy
sandy@sandyhood.com
www.sandyhood.com0 
thanks sandy!0
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