SOURCE: ADAPTED FROM CIMA P1 Operation B in a factory has a standard time of 15 minutes. The standard rate of pay for operatives is R10 per hour. The budget for a period was based on carrying out the operation 350 times. It was subsequently realised that the standard time for Operation B included in the budget did not incorporate expected time savings from the use of new machinery from the start of the period. The standard time should have been reduced to 12 minutes.

Operation B was actually carried out 370 times in the period in a total of 80 hours. The operatives were paid R850. What is the operational labour efciency variance?

R60 adverse R75 favourable R100 adverse R125 adverse