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Good afternoon!
I just had a question about operating statements and variances in relation to an example in the BPP revision book.
The question asks – ‘prepare an operating statement, reconciling budgeted surplus and actual shortfall and discuss the performance over the year’
In the answer, they create the fixed budgeted figures and the actual figures and show variances based on these.
Usually we work out the variance between the flexed and actual figures. Will it specifically say in the exam create a flexed budget or use fixed budgeted vs actual like this example?
Thank you.
Firstly, the examiner has said that you will never be asked to produce an operating statement in Paper PM (you are expected to know what one is, because it is revision from Paper MA (was F2), but you will not be asked to prepare one).
All variance questions in the exam (which will almost certainly be either mix and yield variances, or planning and operational variances) are calculated by comparing actual with the flexed figures (apart, obviously, from the sale variances).
I show the calculations of all the relevant variances in my free lectures. The lectures are a complete free course for Paper PM and cover everything needed to be able to pass the exam well.
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