Know More about Efficiency Variance from Myhomeworkhelp.com
Efficiency variance is the difference between the theoretical amount of input used to produce a unit of the output and the actual input used. Manufacturing industries use efficiency variance as a tool to analyse effectiveness of labour, materials and other production factors. Myhomeworkhelp.com has brought efficiency variance assignment help to empower you with the much-required knowledge of the subject.
A production line considers labour, material, machine time among most important factors to run their operations.In some cases, the actual input used is more than the theoretical figure or budgeted amount. This leads to negative efficiency variance. On the other hand, if actual input amount is less than the budgeted one, there exists a positive efficiency variance.
We have devised a complete package as efficiency variance homework help, elaborating this topic’s various causes and their applicability. We have used baseline theoretical inputs in optimal conditions that have led to slightly negative efficiency variance.
Causes of efficiency variance
Efficiency variance as suggested by our expert professionals is either favourable or unfavourable.
- Efficiency variance homework help states that if a worker manufactures a certain number of units in a certain amount of time less than the standard time budgeted for the said output; the variance is termed as favourable direct labour efficiency variance.
- Standard time allowed for a certain amount of output is pre-decided based on statistical data and empirical evidence.
- If a worker takes more time than the standard time to produce the pre determined level of output, there occurs an unfavourable direct labour efficiency variance.
How we calculate direct labour efficiency variance?
It is computed either in dollars or man-hours. For example, standard time to manufacture a tin can is 15 mins. In reality, a production line of tin can completes the task in 20 mins. The variance is 5mins (>0) which are unfavourable. With a labour cost of $6 per hour, the variance in dollar is $0.5 ($6X 5mins). In management accounting for correct financial assessment, we express efficiency variance in dollars.
Certain conditions are within our control, and we can work around the issue to resolve it when it comes to adverse efficiency variance. In some other cases, as stated by efficiency variance homework help there arise sun favourable variance.
Let’s take a quick look at the causes of unfavourable direct labour efficiency variance.
- Inexperienced labours or fresh appointees with no prior experience
- Poorly motivated workers
- Faulty equipment and machinery
- Low grade raw materials
- Less of supervision by senior workers and management
- Low demand for the production line in the competitive market
- Frequent breakdown of production line due to old machinery beyond repair
- Short supply of raw materials for production
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