Total Direct Labour Variance practice assessment question

gabriellenlewisgabriellenlewis AAT Student Posts: 52
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)????

Answers

  • Adele69Adele69 CambridgeAAT Student Posts: 196
    edited March 27
    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
    gabriellenlewis
  • wessie778wessie778 AAT Student Posts: 1
    or use this formula below:

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