The two components of the direct labour flexible budget variance are the direct labour price variance and the direct labour quantity variance.
<h3>What is direct labour flexible budget?</h3>
To determine how many work hours will be required to create the items listed in the production budget, the direct labour budget is used. The overall number of hours required will be determined by a more intricate direct labour budget, which will also divide this data down by labour type.
Direct labour price variance - The cost of the discrepancy between the expected and actual labour rates is measured by direct labour rate variance. The variance will be deemed unfavourable if it shows that actual labour rates were higher than anticipated labour rates.
Direct labour quantity variance - The cost of the discrepancy between the anticipated number of labour hours needed for the operations and the actual number of labour hours needed for the operations is known as the direct labour efficiency variance.
The labour quantity variance is calculated as-
- The labour price variation is calculated by multiplying the actual hours worked by the actual paid rate, which is then subtracted from the standard budgeted rate.
- The standard rate is multiplied by the difference between the standard hours budgeted and the actual worked hours budgeted to determine the labour quantity variance.
To know more about the flexible-budget variance measures, here
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Answer:
FV= $6,418.20
Explanation:
Giving the following information:
Initial investment (PV)= $5,000
Interest rate (i)= 0.025/12= 0.002083
Number of periods (n)= 10*12= 120 months
<u>To calculate the future value (FV), we need to use the following formula:</u>
FV= PV*(1 + i)^n
FV= 5,000*(1.002083^120)
FV= $6,418.20
1)D, i think...
2)B, i think... not sure
Answer:
The NPV from opening the branch office is negative ( -$106668.08). Thus the branch office should not be opened.
Explanation:
The decision to open the branch office will be taken based on the NPV provided by opening of the branch office. If the NPV of a project is positive based on the required rate of return used as a discount rate fro cash flows, the investment is worth undertaking.
The net present value (NPV) for a project can be calculated as,
NPV = CF1 / (1+r) + CF2 / (1+r)² + ... + CFn / (1+r)^n - Initial Outlay
Where,
- r is the appropriate discount rate
- Initial Outlay is the Initial cost of the project
- CF represents cash flows from the project
As the required return is 16%, we will take this as the appropriate discount rate.
NPV = 45000 / (1+0.16) + 120000 / (1+0.16)² + 150000 / (1+0.16)³ +
150000 / (1+0.16)^4 + 150000 / (1+0.16)^5 - 485000
NPV = - $106668.08
As the NPV from project is negative at a required return of 16%, the project should not be under taken and the branch office should not be open.
