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Chapter 15

Labour variances

5.1 Calculations

AHAR

Rate variance

AHSR Total variance

Efficiency variance

SHSR

If there is idle time, the rate variance is based on the hours actually paid whilst the
efficiency variance is based on the hours actually worked.

Idle time variance:

Actual hours worked × standard rate per hour X

Actual hours paid × standard rate per hour Y
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Idle time variance this is always adverse X – Y
–––––

Illustrations and further practice

Now try TYU question 6 from Chapter 15.

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