Question 1

A software development firm uses standard costing. The standard labor time to code a specific module is 5 hours, at a standard rate of $40 per hour.

In the latest sprint, the team completed 100 modules and actually worked 480 hours.

Calculate the labor efficiency variance in dollars.

(Enter the absolute numeric value only, without commas, currency symbols, or F/A designations. E.g., if the answer is $500 Adverse, enter 500)

Accepted Answer

1. Calculate standard hours allowed for actual production (100 modules * 5 hrs). 2. Compare standard hours to actual hours worked. 3. Multiply the difference by the standard labor rate.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Using the actual rate (if given) instead of the standard rate to value the variance, or calculating the rate variance instead.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 5

More questions from this exam