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Dear Sir,
I have got a question in the BPP revision kit asking for the total sales quantity variance. I have got the variance in units right but the value is calculated by using the average standard profit per unit (of three products which is a separate calculation). I do not remember calculating this in the lectures instead the initial standard profit / contribution was used to calculate the value for each product. Is this just a different method for calculating the variance or did I get something wrong? (additionally the result is obviously not the same)
Thank you,
KatalinIt is simply a different way of doing the same thing, but the answers should end up being the same. It does suggest that you did something wrong in your workings 🙁
If you tell me which number the question is in the Revision Kit, and type out your workings, then I will tell you where you went wrong 🙂
It is question 224 Block Co (page 63) and seems I ended up calculating the sales volume variance instead of sales quantity. I calculated the differences between the budgeted and actual sales units and then multiplied them by the standard profit/unit for each product. The answer says this variance is the volume variance and I should have used the average standard profit/unit to calculate the quantity variance.
If you watch my lectures again, you will see that for the quantity variance you need to compare the budgeted sales with the actual total sales at standard mix. This will give the same result as the answer in the Revision Kit.
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