Assessment 1 task 1.2

Please could someone help and explain the answers to this question. I thought i had cracked variances but i cant get my head around this question.
Budget: Actual
Production- cartons 5,000 6000
Apricots- kg 50,000 70,000
Apricots- £ 25,000 36,000
Direct labour hrs 1,000 800
Direct labour £ 10,000 8,000

Apricots price variance?
Apricots usage variance?
Direct labour rate variance?
Direct labour efficiency variance?

Any help would be greatly appreciated.
Thanks in advance :)

Comments

  • dnataliadnatalia Posts: 2Registered
    Price Variance= 1000 adverse ((70000x(0.5-0.51))
    Usage Variance = 5000 Adverse ((6000x(10-11.67))
    DL Rate Variance = 0 no variance ((10000/1000)-(8000/800))
    DL Efficiency Variance = 4000 Favourable ((6000x0.2x10)-(800x10))
  • silia85silia85 Posts: 12Registered
    Hi guys,

    I still do not understand this task;

    why £70,000 x (0.5 - 0.51) = 1000 A

    I now the formula
    Actual Qty purchased x actual rate
    Actual qty purchased x standard rate

    Diff = price variance

    If you could please explain this to me I would be very grateful.

    Thanks,
    Silia
  • Pian32Pian32 Posts: 72Registered
    Hi Silas
    dnatalie has used a rearranged formula that gets the same result.
    Actual Qty * standard rate - Actual Qty * actual rate == Actual Qty * ( standard rate - actual rate)

    70,000 * (25,000/50,000) - 70,000 * (36,000/70000) == 70,000 * (0.5 - 0.514) = -1,000 therefore 1000 A

    This follows for the other answers given.
    AAT Level 4, MAAT
  • silia85silia85 Posts: 12Registered
    Thank you so much !!! You are a lifesaver 🍀
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