Data relating to period 4:

Required

(a) Explain the term ‘standard hour’ stating why it is used, and illustrate its use by showing the total standard hours produced in period 4.

(b) Calculate, using the information in the data and, where appropriate, the figure from your answer to

(a) above, the following variances:
(i) direct labour total variance:
(ii) direct labour rate variance;
(iii) direct labour efficiency variance.

(c) State two possible causes for your answer to (b)(ii) above.

(d) State two possible causes for your answer to (b)(iii) above.

Tables Chairs Wall units Actual hours worked Standard wages rate per hour Actual wages incurred Units produced Standard time per unit (hours) 400 1,000 4.0 1.2 200 6.0 5,600 4 20,160