Remarks ex. 12.77

1. Remarks ex. 12.77 • First level variance = price variance + efficiency variance Second level variances • FIRST LEVEL (flexible budgets) • Unit related costmaterial costs= actual number of boxes x planned grams of material per box x material cost per gram (planned) • Batch related costslabor cost : (actual number of boxes / planned batch size) x labor hours per batch (plan) x labor cost per hour (plan) • Product sustaining costs and facility sustaining costslabor and other costs = master budget amount + expansion costs (see p. 604) • SECOND LEVEL • Unit related costslabor rate variance : labor hours used x (actual rate per labor hour – standard rate per labor hour) labor efficiency variance : standard rate per labor hour x (labor hours used – labor hour allowed) ! labor hours allowed = actual hours per box x actual number of boxes • Batch related costs Batch labor rate variance : actual number of batches x (actual labor cost per batch – standard labor cost per batch) ! standard labor cost per batch = planned hours per batch x cost per hour (planned) Labor batch efficiency variance : standard labor cost per batch x (actual number of batches – standard number of batches) ! standard number of batches = actual number of boxes / planned batch size