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Hi, I just need to reconfirm if this following formula used as an ‘alternative’ to obtain PLANNING & OPERATIONAL variance would still give me a correct answer , or am I learning it wrong.. Hoping to get clarification before its too late to unlearn it
For ex Labour Hours Planning and Operational –
A) StdHrs x StdRate
B) RevisedStdHrs x StdRate
[A-B = Labour Planning Effeciency Variance]
C) RevisedStdHrs x RevisedStdRate
[B-C = Labour Planning Rate Variance]
D) ActHrs x RevisedStdRate
[C-D = Labour Operational Effeciency Variance]
E) ActHrs x ActRate
[D-E = Labour Operational Rate Variance]
Since I am not able to send image, I had to use ABC to show which one im deducting.
Im aware of the formula given on BPP on how to calculate P&O Variances, but recently learned from someone , therefore I just need clarification.Thank you
In future you must ask in the Ask the Tutor Forum if you want me to answer – this forum is for students to help each other.
As I explain in my free lectures, there are two methods for calculating planning and operational variances. They give different answers, but the examiner accepts either method – there is a logic to both methods.
The previous examiner preferred one method, but the current examiner prefers the other method (which is also easier). The method that I explain in my lectures is the way that the current examiner prefers (and the way that current editions of Study Texts show also).
However, again, the examiner always accepts either method in the exam.
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