- This topic has 3 replies, 2 voices, and was last updated 8 years ago by
.
- Posts
Hello Sir.
Hope you are well,This is a past paper qn (SECURE NET DEC 2009)
Std: 0.04 kgs @ $4 per kg = $0.16 per unit
Actual: 0.035 kgs @ $5.25 per kg = $0.18375 per unit
Revised: 0.042 kgs @ $4.8 per kg = $0.2016Actual produced and sold = 100,000 cards
Budget = 60,000 cards.Calculate:
Material price planning and operational variance
Material usage planning and operational variance…My answers:
Material price planning = 3360 A
Material price operational = 1890 A
Material usage planning = 800 A
Material usage operational = 2800 ABut the answer says:
Price operational = 1575 A
Usage operational = 3360 F
Price planning = 3360 A
Usage planning = 800 AYou will be aware from my free lectures on this, that there are two ways of calculating planning and operational variances that give different answers. There are good arguments for both ways, and either way will get full marks.
It was the previous examiner who set Secure Net. He preferred one way, and the second set of answers you have typed are the correct answers doing it that way.
The current examiner prefers the other way (which is easier), and is therefore the way that I do it in my lectures. If you do it this way, then the usage variances are as per your answers, except that the operational usage variance should be 2,800 (F) (not adverse) – the actual usage is less than the revised usage.
However the price variances doing it this way should be:
Planning: 100,000 x 0.035kg x (4.80 – 4.00) = 2,800 (A)
Operational: 100,000 x 0.035 x (5.25 – 4.80) = 1,575 (A)
- The topic ‘OPERATIONAL AND PLANNING VARIANCES’ is closed to new replies.