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Turnover and Value added

jmhjmh Registered Posts: 42
in Management Accounting: Decisions and Control
Hello,

Can someone help with this please:

Value added per employee 46000
Cost of material used 1788000
Cost of bought in services 432000

if business has 20 employees calculate the total turnover
if 8000 units were produced calculate the value added per unit produced

thank you

Comments

  • CheesypeesyCheesypeesy MAAT Posts: 102
    Total value added = total turnover - total costs.

    (46,000 *20) = Total turnover - 1,788,000 - 432,000.

    Rearrange to get total turnover = £3,140,000.

    Value per unit produced = total value/number of units.

    (46,000 * 20)/8000 = £115.00
    Matthew Dearlove MAAT
    Currently on CIMA Management Level. Passed P2, F2 and E2. Preparing for November 19 MCS.
  • jmhjmh Registered Posts: 42
    thank you!

    Can you please help me with something else.

    The product requires 3 hours of labour at a cost of £15 per hour.During the month the company used 1,500 labour hours to produce 450 units and the labour rate variance was £420 favourable.
    Calculate the actual labour rate per hour. £

    thank you
  • CheesypeesyCheesypeesy MAAT Posts: 102
    Labour rate variance = (standard price per hour * actual hours at actual production) - (actual price per hour * actual hours at actual production).

    I'll denote actual price per hour as X.

    £420.00 = (£15.00 * 1500) - (X * 1500)
    £420 = £22,500 - 1500X
    X = £22,080/1500 = £14.72
    Matthew Dearlove MAAT
    Currently on CIMA Management Level. Passed P2, F2 and E2. Preparing for November 19 MCS.
  • jmhjmh Registered Posts: 42
    thank you. I honestly don't think I will ever be able to get my head around those Variances. Surely this is not difficult, must be having mental blockage with this.

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