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July 10, 2015 at 10:45 am
Sir, can you please explain Variance Percentage?
how is it calculated??
John Moffat says
July 10, 2015 at 11:28 am
Is the variance expressed as a % of the budget (but is not asked for in Paper F2).
July 11, 2015 at 7:58 am
My teacher taught me that It is calculated using this formula:
Variance % = [Variance (Adv or Fav) / St. or Budgeted Cost]*100
eg MPV % = [MPV (Adv or Fav) / St Cost of RM per unit]*100
I wanna know, Is the Standard or Budgeted Cost used above is the whole cost that should’ve been incurred for the actual output?? and will the same cost be used when doing Material Quantity Variance %??
Also that, Is variance % a margin ( or %) of the budgeted cost??
July 11, 2015 at 9:47 am
Again, variance percentage is not in the syllabus for Paper F2! (and it can be calculated in more than one way – there is no standard rule.)
July 15, 2015 at 9:11 am
Thank you very much for the guidance Sir.
July 15, 2015 at 9:36 am
You are welcome
June 18, 2015 at 11:05 am
for a product r mpv for august was $1000F and muv 300A
standard usage per unit is 3kg standard material price is 2 per kg
500 units were produced in the period opening inventory on raw materials was 100 kg and closing inventory 400kg material purchases in the period were.
sir please help thnx in advance
June 18, 2015 at 11:14 am
You must ask these questions in the Ask the Tutor Forum, and not as comments on a lecture.
May 16, 2015 at 11:18 pm
First of all thanks for all lecturess.. its really helpfull.
i study from BPP and there is this all sort of formulas like … direct material total variances=standard material cost per unit for actual output-actual total material cost.. this formula is necessary to use?
May 17, 2015 at 10:12 am
There are several ways you can calculate the variances (all giving the same answer ), and you can use whichever you find the easiest.
I prefer the way I do it because I always find learning formulae dangerous (partly in case I forget them, but also because I think it important to understand what is happening).
July 22, 2014 at 9:07 am
Sir, is this the formula for labour rate variance?
Labour rate variance(A/F) = (Actual rate – Standard rate) x actual hours paid?
July 22, 2014 at 9:39 am
That is correct
November 10, 2013 at 12:23 am
I also realize that with the rule you mentioned, you said that it is the actual purchases at cost minus actual purchases at standard cost nut based on the BPP text i am using it does the reverse of your rule. Which of the rule is correct cause it would affect whether the final amount would be favourable or adverse.
November 10, 2013 at 8:17 am
It does not matter which way round you write the rule – the number will be the same!
As regards whether it is adverse or favourable, you really should not learn that as a rule – if you are spending more than you should it is adverse, if you are spending less than you expect then it is favourable.
Certainly learn the rules for the calculations, but you must make sure you understand why variances are favourable or adverse – the exam will not simply test that you have learned rules – it will test your understanding as well.
November 10, 2013 at 12:15 am
Why is the $612.00 favourable when the amount of 136 kg would have been an adverse amount.
November 10, 2013 at 8:20 am
Why on earth is the 136kg adverse?
For the production of 8,900 units, we would have expected to use 8,900 x 4 = 35,600 kg.
We actually only used 35,464kg which is 136 less than we would have expected – that will save money, give more profit, and is therefore favourable.
November 10, 2013 at 11:34 am
I realised my error. I understand now. Thanks for your reply.
December 13, 2012 at 6:48 pm
I watched open tuition for the first time and that lecture on budgeting and variances was amazing. I now know how to calculate variances without memorising the formula. That tutor teaches the concept which is exactly what I needed. Excellent lecturer
April 15, 2012 at 10:53 am
why in flexible budget closing inventory are valued at fixed budget valuation amount??
November 10, 2013 at 8:22 am
It is valued at standard cost in management accounting,
The reason (which is explained also in the lecture) is because variance analysis would usually be done every month and it will be silly to keep changing the inventory values each month – some months costs will be higher and some months the costs will be lower, and so we value inventory at what we expect the average cost for the year to be.
(In practice, there could be good reasons for actually changing the standard cost during the year, but this will not happen in Paper F2 – we always value inventory at standard cost.
March 29, 2012 at 7:18 am
what u see is what you get
this is what he told me!!!!! lol
February 12, 2012 at 9:26 am
it’s real nice lectures! Thank you opentuition!
November 10, 2011 at 9:01 am
wow,thats terrific,splendid lectures.Admin,how about the other lectures for chapter 20,14,19,25,23,21 and 26.
September 5, 2011 at 4:15 pm
Well explained .Thanks for the great effort. Keep it up
August 1, 2011 at 8:13 pm
wonderful……thank you sir.
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