Labour Efficiency Calculation

[sterne.law@gmail.com]

I agree with Houses.
Calculate actual
Calculate standard
I differ on the variance percent, but purely on the perspective from which way the ratio is calculated.
I take the variance in rands (150 300) divided into the standard.
The difference is then 10, 3 percent

[Houses4Rent]

The difference is then 10, 3 percent

Me thinks Standard is supposed to be your 100%, your base. Therefore my 90.6% should be right, I hope.
In other words they were 9.4% less efficient than they should have been.

[CLIVE-TRIANGLE]

Houses, it is a specific measurement of direct labour efficiency. You compare the standard hours that it should have taken to produce, to the actual hours it took, and multiply the difference in hours by the standard cost per direct labor hour.

If you start mixing standard and actual rates you corrupt the measurement.

[Houses4Rent]

I am not with you. Efficiency is always a percentage.

>multiply the difference in hours by the standard cost per direct labor hour
That would be a Rand amount, not a percentage

[CLIVE-TRIANGLE]

It's a classical cost accounting formula.

The variance account for any period will have a balance. The balance consists of mainly two components, one of which is efficiency; the other is mostly rate.

So, if you subtract the efficiency variance, you are left with a balance that points to a mainly rate problem, either too high or too low.

Here is a decent explanation

[Houses4Rent]

Seems all to be an accounting issue/function. In that case I stay out of it as I suck at it.