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Costing
Pls explain the terms used in the question Illu 7 icai
Answers (8)
"Actual hours expected to be worked" denotes budgeted hours...(i e..planned to work for 6400hrs but actually worked only for 6000hrs) Standard hours expected to be earned per four weeks..it denotes maximum possible working hours (co.has capacity of 50workers available.50*8*5*4=8000hours..) But actually.,the capacity is reduced. to 40 workers ..
Thread Starter
mani charanWhat os the meaning of hours earned
If the 50 workers worked ...8000hrs..they can expect to earn for those hrs ..
Sajeetha R
If the 50 workers worked ...8000hrs..they can expect to earn for those hrs ..
But 40 workers only worked ..so they cannot expect to earn for additional hrs ...so, actual standard hours earned is 7000hrs.
Sajeetha R
But 40 workers only worked ..so they cannot expect to earn for additional hrs ...so, actual standard hours earned is 7000hrs.
That means the expected hrs are. 8*5*40*4=6400
Thread Starter
mani charanThat means the expected hrs are. 8*5*40*4=6400
So there is a favourable variance
Thread Starter
mani charanSo there is a favourable variance
Yes . Standard hours 7000..actual hrs 6000.actual hours expected to be worked (budgeted hours)6400 hrs. For producing a certain quantity of output it takes 7000hrs..but workers taken 6000 hrs..so it's result in favourable efficiency variance. When 40employed it takes ...6400hrs (estimated by calculations)budgeted hours. Actual the 40workers has taken taken only 6000 hours to produce such output ..this will be unfavourable in case of budgeted capacity ...(i.e.underutilization of capacity) Efficiency variance is favourable when worked hrs is less than std (less time consumption)..eg...no.of time taken to complete exam ...SH 3hrs- AH 2.30hrs =30min(f) Capacity variance is favourable when Worked hours is more than budgeted...hrs.. (i.e. u planning to study for 12 hrs in a day..(budgeted hours).. actually studied for 10hrs...2hrs(a)..is underutilization of capacity..
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