Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Labour efficiency variance
- This topic has 3 replies, 2 voices, and was last updated 9 years ago by John Moffat.
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- March 14, 2015 at 7:33 pm #232411
Good Day Sir
Please help with the following:
A company uses standard marginal costing. For April budgeted sales & production were 2000 units, actual ales & production were 2,200 units
Std selling price was $20 per unit, standard variable production cost was $14 per unit.
Actual selling price was $23 per unit, standard variable production cost was $15 per unit.
What was the favourable sales price variance?
My workings:
Actual: 2200×23=50,600
Std: 2200×20=44,000
Favourable price variance=6,600But why don’t we take into account the production costs?
So would the efficiency variance then be:
Actual: 2,200x(23-15)=17,600
Std: 2,000(23-15)=16,000
=1600 favourableOR
also as 200 @ $8=1,600 F?Thanks
ZuzieMarch 15, 2015 at 8:54 am #232444Production cost and efficiency variance are completely irrelevant because the question is asking for the sales price variance. All the sales price variance is looking at is whether the goods were sold at the budgeted selling price or not.
I do suggest that you watch the free lectures on variance analysis.
March 15, 2015 at 2:10 pm #232472yes will do
thank u
March 15, 2015 at 3:45 pm #232482You are welcome 🙂
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