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  1. avatar says

    is this deleted for june 2014 exam
    i am really confused
    Calculate, identify the cause of and interpret
    basic variances: [1]

    i) Sales price and volume
    ii) Materials total, price and usage
    iii) Labour total, rate and efficiency
    iv) Variable overhead total, expenditure and
    efficiency
    v) Fixed overhead total, expenditure and, where
    appropriate, volume, capacity and efficiency.
    so shall i know the rules of the variances or not
    and preparation of operating statements

    • Avatar of johnmoffat says

      No – it is not deleted. It is assumed knowledge from Paper F2.

      The examiner has made it clear that they can be asked as part of a question. The syllabus for June 2014 is the same as for the last two exams and basic variances were examined in both.

      In addition, it is impossible to understand planning & operational variances without an understanding of basic variances.

  2. avatar says

    Dear Mr. John. In the last exam there was a question which said to find the sales price operational variance and the sales price planning variance. In the question, there were standard variable production costs per unit figures and there were also average market price per unit figures. Strangely, the former was not used at arriving at d solution. Instead, it was the latter that was used.The formulas used at arriving at d answers were (actual price – market price) x actual quantity and (standard price – market price) x actual quantity respectively. Please I am a bit taken aback as u did not talk about average market price per unit in your examples. Thanks and well done.

    • Avatar of johnmoffat says

      Variable costs are never relevant in calculating sales price variances – they are not relevant in my lecture and neither in the exam question.

      The reason market price was used was because we were doing planning and operational variances, and market price is effectively the revised standard cost. I did not mention market price in my lecture (and I won’t in future either) – it is not a standard term and has not been used before, but it was clearly meant to indicate the revised standard cost. Next time she might use other words because she is testing your understanding rather that you have just learned rules.

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