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Method 1: Planning variance
(SP – RP) x AQ: ($3·00 – $2·85) x 54,560 8,184 FMethod 2: Planning variance
(AP x RQ) x (SP – RP): 24,000 x 2·2 metres x ($3·00 – $2·85) 7,920 FBoth are Price variances. In your lecture you did say there are two methods to calculate this, should I just follow the method one? It seems more fair to the pricing variance
Can you please also make a comment on how the Favourable results were different?
Okay, I just figured it out.
Method one > Actual quanty for actual production x 0.15
Method two > Standard Qty for actual production x 0.15If we’re using method one > Usage variance (Operational) in KG will be multiplied by old standard price.
If we’re using method two > Usage variance(Operational) in KG will be multiplied by revised standard price.Correct sir?
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