Variance Analysis (4)

Question 1

What is a labour efficiency planning variance?

Answer 1

Difference between original standard time per unit and revised standard time for quantity of units produced

Question 2

How is the efficiency planning variance converted?

Answer 2

Into a total monetary value by applying original standard rate per hour, not revised standard rate

Question 3

What is a labour efficiency oeprational variance?

Answer 3

Calculated by comparing actual time to make output units with the standard time i nthe revised standard

Question 4

How is the labour efficiency operational variance converted/

Answer 4

Into a monetary value by applying the original standard rate per hour

Question 5

Example of a steady state reached?

Answer 5

Production of each additional unit should take the same amount of time

Question 6

Combining standard costing with learning curve (original standard)

Answer 6

Establish an original standard labour cost per unit, even though a learning effect will apply to production

Question 7

Combining standard costing with learning curve (end of budget period)

Answer 7

At end of budget period, revise the standard time per unit

Question 8

Combining standard costing with learning curve (original and revised standard cost)

Answer 8

With original standard cost and revised standard cost, planning and operational variances can be calculated. As there’s the learning effect, labour efficiency planning variance will always be favourable

Question 9

How can the sales volume variance be reported as?

Answer 9

A sales volume planning variance

A sales volume operational variance

Question 10

What is a sales volume planning variance caused by?

Answer 10

The difference between the sales volume in the original budget and sales volume in the revised budget

Question 11

What is a sales volume operational variance caused by?

Answer 11

Difference between actual sales volume and sales volume in the revised budget

Question 12

What is done when there may be a situation where a revision is made to the budgeted or standard selling price for a product?

Answer 12

A sales price planning variance and a sales price operational variance is calculated

Question 13

A sales price planning variance and a sales price operational variance within sales management responsibility?

Answer 13

Planning variance is generally outside control of sales management

Operational variance is within sales management’s control