Page 1 of 2 12 LastLast
Results 1 to 10 of 16

Thread: Labour Efficiency Calculation

Hybrid View

Previous Post Previous Post   Next Post Next Post
  1. #1
    New Member
    Join Date
    Aug 2013
    Location
    KZN
    Posts
    5
    Thanks
    11
    Thanked 0 Times in 0 Posts

    Labour Efficiency Calculation

    Hi All,

    My fellow engineers and I are debating the right way to calculate the Direct Labour Efficiency Variance for the following problem. I think we're thinking about it too complicatedly.

    I've over simplified the actual problem for the purpose of easy discussion as follows:

    Calculate the total Direct Labour Efficiency Variance:

    Standard Time to Complete Job: 17 Weeks
    Actual Time to Complete Job: 18 Weeks

    Standard Engineers Count: 114
    Standard Weekly Rate: R750
    Actual Engineers Count: 108
    Actual Weekly Rate: R825

  2. #2
    Diamond Member
    Join Date
    Mar 2010
    Location
    Cape Town
    Posts
    6,329
    Thanks
    426
    Thanked 978 Times in 795 Posts
    94%

  3. #3
    Gold Member
    Join Date
    Mar 2012
    Location
    Vanderbijlpark
    Posts
    886
    Thanks
    83
    Thanked 381 Times in 298 Posts
    Direct labour efficiency variance = (actual time - standard time) x standard cost

    So in your example it is R750 unfavourable.

    I'm not sure what "engineer count" means

  4. Thanks given for this post:

    speed_demon (06-Sep-14)

  5. #4
    Gold Member Houses4Rent's Avatar
    Join Date
    Mar 2014
    Location
    Cape Town
    Posts
    803
    Thanks
    8
    Thanked 56 Times in 52 Posts
    Standard 17 114 R750 R 1,453,500
    Actual 18 108 R825 R 1,603,800

    R 1,453,500 divided by R 1,603,800 90.6%
    Houses4Rent
    "We treat your investment as we treat our own"
    marc@houses4rent.co.za www.houses4rent.co.za
    083-3115551
    Global Residential Property Investor / Specialized Letting Agent & Property Manager

  6. Thanks given for this post:

    speed_demon (06-Sep-14)

  7. #5
    Diamond Member
    Join Date
    Mar 2010
    Location
    Cape Town
    Posts
    6,329
    Thanks
    426
    Thanked 978 Times in 795 Posts
    My head aches!

  8. Thanks given for this post:

    speed_demon (06-Sep-14)

  9. #6
    New Member
    Join Date
    Aug 2013
    Location
    KZN
    Posts
    5
    Thanks
    11
    Thanked 0 Times in 0 Posts
    Quote Originally Posted by CLIVE-TRIANGLE View Post
    Direct labour efficiency variance = (actual time - standard time) x standard cost

    So in your example it is R750 unfavourable.

    I'm not sure what "engineer count" means
    It refers to the number of employees. So the Actual Engineers employed was 108. Standard was 114.

  10. #7
    Gold Member
    Join Date
    Mar 2012
    Location
    Vanderbijlpark
    Posts
    886
    Thanks
    83
    Thanked 381 Times in 298 Posts
    Quote Originally Posted by speed_demon View Post
    It refers to the number of employees. So the Actual Engineers employed was 108. Standard was 114.
    Oh ok. The more accurate formula, that takes account of any stratification, is (Actual Time x Standard Rate) - (Standard Time X Standard Rate)
    So, if I understand the data correctly, it is:
    (18 x 108 x 750) - (17 x 114 x 750) = 4,500 unfavourable

    Actual rate is ignored because it is an efficiency variance that is being determined.

  11. Thanks given for this post:

    speed_demon (07-Sep-14)

  12. #8
    Gold Member Houses4Rent's Avatar
    Join Date
    Mar 2014
    Location
    Cape Town
    Posts
    803
    Thanks
    8
    Thanked 56 Times in 52 Posts
    Quote Originally Posted by CLIVE-TRIANGLE View Post
    Oh ok. The more accurate formula, that takes account of any stratification, is (Actual Time x Standard Rate) - (Standard Time X Standard Rate)
    So, if I understand the data correctly, it is:
    (18 x 108 x 750) - (17 x 114 x 750) = 4,500 unfavourable
    Actual rate is ignored because it is an efficiency variance that is being determined.
    Clive, you missed the R850 and you need to turn it around, i.e.
    (17 x 114 x 750) - (18 x 108 x 850)
    Houses4Rent
    "We treat your investment as we treat our own"
    marc@houses4rent.co.za www.houses4rent.co.za
    083-3115551
    Global Residential Property Investor / Specialized Letting Agent & Property Manager

  13. #9
    New Member
    Join Date
    Aug 2013
    Location
    KZN
    Posts
    5
    Thanks
    11
    Thanked 0 Times in 0 Posts
    Quote Originally Posted by CLIVE-TRIANGLE View Post
    Oh ok. The more accurate formula, that takes account of any stratification, is (Actual Time x Standard Rate) - (Standard Time X Standard Rate)
    So, if I understand the data correctly, it is:
    (18 x 108 x 750) - (17 x 114 x 750) = 4,500 unfavourable

    Actual rate is ignored because it is an efficiency variance that is being determined.
    This is my logic too. My main issue was how to incorporate the change in employee counts.

  14. #10
    Diamond Member
    Join Date
    Mar 2010
    Location
    Cape Town
    Posts
    6,329
    Thanks
    426
    Thanked 978 Times in 795 Posts

    Thumbs up

    Engineers Cost Weeks Total Cost
    114 R 750.00 17 R 1 453 500.00
    108 R 825.00 17 R 1 514 700.00
    Projected cost R 2 968 200.00

    114 R 750.00 18 R 1 539 000.00
    108 R 825.00 18 R 1 603 800.00 ( Projected / Actual ) * 100
    Actual cost R 3 142 800.00 94%

    ...my 20c worth!

  15. Thanks given for this post:

    speed_demon (06-Sep-14)

Page 1 of 2 12 LastLast

Similar Threads

  1. [Question] Help with FOB price calculation
    By riaano in forum General Business Forum
    Replies: 3
    Last Post: 24-Aug-12, 10:55 AM
  2. Trade and Industry on energy efficiency regulations for new buildings
    By I Robot in forum Electrical Load Shedding Forum
    Replies: 1
    Last Post: 16-Jun-10, 08:50 AM
  3. Overtime Calculation
    By Yvonne in forum General Business Forum
    Replies: 3
    Last Post: 02-Sep-08, 07:50 AM
  4. Simple ways to improve your energy efficiency
    By duncan drennan in forum Energy and Resource Conservation Forum
    Replies: 14
    Last Post: 27-Aug-08, 07:49 AM
  5. [Article] Efficiency, Redundancy and being Effective.
    By Dave A in forum Entrepreneurship and Business Management Forum
    Replies: 3
    Last Post: 19-Feb-08, 11:27 AM

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •