Financial Performance: Fixed Overhead Efficiency
gabriellenlewis
Registered Posts: 129
Production (units):
BUDGET- 64,000
ACTUAL- 67,000
Direct labour costs:
BUDGET- £5760,000
ACTUAL- £5896,000
Fixed overheads:
BUDGET- £3840,000
ACTUAL- £3950,000
Overheads absorbed on labour hour basis and the budget uses 480,000 labour hours.
The actual labour hours used to produce 67,000 units totalled 536,000 labour hours.
Please help!
BUDGET- 64,000
ACTUAL- 67,000
Direct labour costs:
BUDGET- £5760,000
ACTUAL- £5896,000
Fixed overheads:
BUDGET- £3840,000
ACTUAL- £3950,000
Overheads absorbed on labour hour basis and the budget uses 480,000 labour hours.
The actual labour hours used to produce 67,000 units totalled 536,000 labour hours.
Please help!
0
Comments
-
Try saying -
X amount of units DID take ? Hours at standard rate
X amount of units SHOULD take ? Hours at standard rate
Therefore
Work out the standard rate per hour first = budgeted total fixed overheads/budgeted labour hours (as its per labour hour) = £3840000/480000 = £8 per hour
Then do-
67000 units DID take 536000 hours at £8 = £4288000
67000 units SHOULD have taken (480000/64000 = 7.5 hours per unit) 502500 hours at £8 = £4020000
£4288000 - £4020000 = £268000 adverse (because it took more hours to produce the 67000 than it should)
Hope this makes sense1 -
Thank you @bevh0
-
Thank you0
-
For the same question, parts a and b.
Would you be able to show me how the Fixed Overhead Volume Varience is found
and also the actual fixed production overhead incurred is please?0
Categories
- All Categories
- 1.2K Books to buy and sell
- 2.3K General discussion
- 12.5K For AAT students
- 319 NEW! Qualifications 2022
- 157 General Qualifications 2022 discussion
- 11 AAT Level 2 Certificate in Accounting
- 56 AAT Level 3 Diploma in Accounting
- 92 AAT Level 4 Diploma in Professional Accounting
- 8.8K For accounting professionals
- 23 coronavirus (Covid-19)
- 272 VAT
- 92 Software
- 274 Tax
- 136 Bookkeeping
- 7.2K General accounting discussion
- 201 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 345 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 582 Job postings
- 16 Who can benefit from AAT?
- 36 Where can AAT take me?
- 42 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 25 Apprenticeships
- 66 AAT membership