Bhimani, Horngren,
Datar and Rajan,
Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012
• Economies of scale in production. Direct manufacturing labour price variance (€2,325 U, due to actual rate of €31.00 compared to budgeted €30.00).
• Standard wrongly (unrealistically) set.
• Use of higher-skill mix than budgeted.
• Poor negotiations with labour.
• Overtime may have been necessary to produce the extra 50 desks more than budgeted.
• Unexpected labour shortage due to external factors. Direct manufacturing labour efficiency variance (€2,250 U,
due to actual time being 3.1 hours compared to budgeted 3.0 hours per desk.
• Standard wrongly (unrealistically) set.
• Labour maybe less efficient at higher output levels due to tiredness.
• Scheduler assigned less skilled workers to desk production.
• Machine breakdowns required more use of labour.
•
Lower-quality wood purchased requiring more labour input to finish desks.
Share with your friends: