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

  • dnatalia
    dnatalia Registered Posts: 4
    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))
  • silia85
    silia85 Registered Posts: 15
    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
  • Pian32
    Pian32 Registered Posts: 474 Dedicated contributor 🦉
    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
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  • silia85
    silia85 Registered Posts: 15
    Thank you so much !!! You are a lifesaver ?
  • LouboutinLou1
    LouboutinLou1 Registered Posts: 27 Regular contributor ⭐
    Hi Sorry, where is the 0.2 coming from? DL Efficiency Variance = 4000 Favourable ((6000x0.2x10)-(800x10)). Many thanks
  • Pian32
    Pian32 Registered Posts: 474 Dedicated contributor 🦉
    @LouboutinLou1

    It's from converting the labour time into a per unit time. 1000/ 5000 = time/unit = 0.2.
    AAT Level 4, MAAT
    ACCA in progress
    F4- Passed Aug 2020
    F5- Passed Dec 2020
    F6- Passed Sep 2020
    F7- Passed June 2021
    F8 - Passed Sep 2021
    F9 - Passed June 2021

    SBL -
    SBR - Passed Mar 22
    ATX - Passed Dec 21
    APM - Passed June 22
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