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Hi
In example one of chapter 14 Planning and Operational variance, I believe the materials usage variance is calculated incorrectly however please correct me if I’m wrong.
The answer states 5150(Actual materials/litres used) x 0.95(Budgeted unit price) with 5200(Actual units produced) x(1.2 litres budgeted materials usage) x(budgeted unit price)
My concern is the 5200 as that is how many ACTUAL units were sold. Shouldn’t it be 5000 as that’s how many units we budgeted to produce with standard usage and price
Thank you
LuqThere are two ways of calculating planning and operational variances – they give different answers, but the examiner accepts either way.
The lecture does it the same way as the Student Accountant Article.
However the examiner now does it a different way.
So…the lecture is not wrong. However, if you have already learned it the other way then do not change. Best is to look at the recent past exam question called Truffle.
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