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Variances

Forums › ACCA Forums › ACCA MA Management Accounting Forums › Variances

  • This topic has 3 replies, 4 voices, and was last updated 5 years ago by mhamidlad.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • November 18, 2014 at 3:21 pm #211017
    Steven
    Member
    • Topics: 22
    • Replies: 15
    • ☆

    Hi Sir,

    Not sure I understand how you arrived to the answer of Chapter 22 question 8

    A company operates a standard marginal costing system. Last month actual fixed overhead expenditure was
    2% below budget and the fixed overhead expenditure variance was $1,250.
    What was the actual fixed overhead expenditure for last month?
    A $61,250
    B $62,475
    C $62,500
    D $63,750

    Thanks

    November 18, 2014 at 4:24 pm #211049
    brigelm
    Member
    • Topics: 0
    • Replies: 1
    • ☆

    1250/2% – 1250 = 61250

    November 18, 2014 at 11:48 pm #211144
    suprim
    Member
    • Topics: 0
    • Replies: 1
    • ☆

    So this is how i did it. Long but easy too understand i will say

    first lets suppose budgeted overhead is x.

    As question suggestion actual expenditure is 2% less than budget
    which will gives us :- actual overhead = x – 2%x

    now, when the overhead cost lower than what we’ve expected, that would certainly means it is good for us so a positive figure for that

    so finally we can work it out this from
    budgeted FOH – actual FOH = 1250
    which again is : x-x-2%x=1250

    September 11, 2019 at 11:26 am #545849
    mhamidlad
    Member
    • Topics: 0
    • Replies: 3
    • ☆

    Fixed overhead expenditure variance = Actual cost – Budgeted cost = $1,250 A
    Actual overhead = Budgeted cost – 2%
    2% = $1,250
    Actual overhead = 1,250/2 × 98 = $61,250

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