Compute the labour efficiency variance

Reference no: EM132899460

Variance Review

You plan to make 1,000 units for the year. Each unit takes 3 hours to make.
Each unit uses 20 kg. of material costing $30 per kg.
You pay $20 per hour for Labour.

One week you made 15 units. It took 42 hours.

1) Were you better (favourable) or worse (unfavourable) than your standard?

2) Compute the labour efficiency variance (LEV).

One week you made 15 units. It took 330 kg.

3) Were you better (favourable) or worse (unfavourable) than your standard?

4) Compute the material efficiency variance (MEV).

(Note that MEV is ALWAYS based on ACTUAL output)

5) Would the MEV change whether we bought 300, 400 or 500 kg that same week?

Reference no: EM132899460

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