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I would like to know planning and operational variance for material price and usage variance. And also know labour rate and efficiency variance .
BPP’s formula and opent tuition couse note are same . But dec 2012 and dec 2013 examiner’s answer are not same with them.
Pls advise me.
Thanks
Lin Kyi PhyoThere are two different ways of calculating Planning and Operational Variances, and they give different answers.
BPP, Kaplan, and Opentuition do it the more sensible way (and the way that was in an examiners article some time ago).
The examiners answer does it a different way (and gets a different answer) but makes it clear that you would get full marks for doing it either way.To see an answer to the December question done the more sensible way, zoo the following page:
https://opentuition.com/acca/f5/f5-december-2012-question-2-planning-and-operational-variances/dear sir,
i have been doin a practice question in bpp kit and i came across question number 60..here the standard direct labour efficiency (hrs/unit) is 1.25..further information is give for the prepration of revised cost,it says the standard for labour efficiency had anticipated buyin a new machine leading to 10% decrease in labour hours..the correct revised cost is 1.39 in the answers at the back calculated by 1.25 into 100/90..what i think as the labour hour is decreased by 10% the revised cost should be 1.125 calculated by 1.25 into 90/100..please correct me if i am wrong..thank youYou have misread note 3.
It says that when they prepared the standard costs, the thought they were going to buy a new machine.
However, they did not buy the new machine (they improved existing machines), so there will not have been the saving of 10% and the new standard will be higher.(For every 100 hours it takes on existing machines, they thought they were going to save 10% and therefore expected to need 90 hours when they prepared the standard. Because they are not buying the new machine, for every 90 hours they used for the original standard, they should have left it at 100 hours. So multiply by 100/90.)
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