Accounting for Managers: Interpreting accounting information for decision-making

236 ACCOUNTING FOR MANAGERS

Table 15.13 Labour rate variance

Skilled

Actual quantity 55,000

Standard price @ £15.00 825,000

Actual quantity 55,000

Actual price @ £15.25 838,750

Adverse variance −13,750

Unskilled

Actual quantity 26,000

Standard price @ £7.50 195,000

Actual quantity 26,000

Actual price @ £7.50 195,000

Favourable variance 0

Total rate variance – adverse −13,750

Table 15.14 Total labour variance

Efficiency – adverse −7,500

Rate – adverse −13,750

Total – adverse −21,250

Skilled −28,750

Unskilled 7,500

−21,250

Table 15.15 Variable overhead variance

Std cost

per unit

Original

budget

Std cost

per unit

Flexed

budget

Usage

qty

Act cost

per unit

Actual Variance

Variable
overhead

6 @ £5 300,000 6 @ £5 270,000 55,000 5.15 283,250 −13,250

been worked this has consumed more variable costs, e.g. the more machines
running, the more electricity may be consumed.
The overhead spending variance is £8,250 adverse. This is shown in Table 15.17.
This variance is due to extra spending for each hour worked. The reason for this
variance may be a higher cost per hour, e.g. the rate per kilowatt used paid to the
utility provider may have increased.