Material & Labour Calculations

Question 1

£ per kilo formula

Answer 1

Total cost / materials used

Question 2

Material used formula

Answer 2

Materials used / units produced

Question 3

Flexed budget (standard cost) materials

Answer 3

Kilo per unit X. Units produced. X standard price

Question 4

Flexed budget - labour

Answer 4

No of mins / 60 mins X Units produced X Rate (£)

Question 5

Labour rate formula

Answer 5

Total cost / no of hours

Question 6

Overtime required formula

Answer 6

1) No of staff X no basic hours
2) no of mins / 60 mins X units produced

2 Minus 1

Question 7

Material purchases (incl wastage during production)

Answer 7

1) 100/(100-wastage%) X units to manufacture
2) answer to 1 X Kg per unit
3) answer to 2 MINUS opening inventory ADD closing inventory

Question 8

Direct labour hours formula

Answer 8

No of mins/60 mins. X. Total no of units

Question 9

Production in-house formula

Answer 9

No of employees X total number of hours (including O/T) / (no of mins/ 60)

Question 10

How to calculate: (Materials budget)

1) Flexed budget
2) standard cost
3) usage variance
4) price variance

Answer 10

1) kilo per item X £ per item X units sold
2) £ per item X materials used
3) difference between 1 and 2
4) difference between 2 and the actual cost (given in notes)

Question 11

How to calculate: (labour budget)

1) flexed budget
2) standard budget
3) efficiency variance
4) rate variance

Answer 11

1) no of mins/60 mins X units sold X £ per unit
2) £ per hour X no of hours used
3) difference between 1 and 2
4) difference between 2 and actual cost (given in notes)

Question 12

How to calculate units to be sub-contracted?

Answer 12

1) No of mins per unit / 60 mins
2) No of hours available / Answer from point 1
3) total number of items to make - answer from point 2