Total Direct Labour Variance practice assessment question

gabriellenlewis

Budget Direct Labour Hours: 5400
Budget Direct Labour Cost: £47250

Actual Direct Labour Hours: 4230
Actual Direct Labour Cost: £38070

Calculate the TOTAL DIRECT LABOUR VARIANCE


I have tried (SH X SR) - (AH X AR) and (AH X AR) - (SH X AR) and (AH X SR) - (SH X SR).

None get the answer given (1305)????

Adele69

missing Units and Standard Hours though...

£47,250/5,400 Lab hrs = £8.75 p/Lab hr
18,000/5,400 Lab hrs = 3 1/3rd units p/Lab hr

At Std Rate £8.75 x (15,000 Act units/3.33etc u/p Lab hr = 4,500 Std Lab Hrs) = £39,375
less Actual Cost = £38,070
Total DL variance is £1,305 F

This isn't quite how BPP show their workings (they used hours per unit) but it's how I understood it based on units per Lab Hour even though the decimal is annoying

wessie778

or use this formula below:

Standard cost of labour for the actual production level minus Actual cost of labour for the actual production level.