- This topic has 7 replies, 2 voices, and was last updated 5 years ago by
.
- Posts
hey Sir!
The question starts as below from BPP revision kit:
Valet Co is a car valeting (cleaning) company. It operates in the country of Strappia, which has been badly affected
by the global financial crisis. Petrol and food prices have increased substantially in the last year and the average
disposable household income has decreased by 30%.
My question : While calculating the sales quantity varaince we compare actual quantity and standard quantity right ? I am not sure why have they done the mix in that ?Also, a general question sir I am first time appearing so wanted to confirm one thing for Section A we wont be getting any spreadsheet to cal even a small things and for section B and C we will be provided with spreadsheets ? please correct if wrong?
For the sales quantity variance we compare the actual total sales at standard mix with the budget sales. (The statement you have written is for the calculation of the volume variance).
I do suggest that you watch my free lectures on the advanced sales variances.Spreadsheets are available for Section C of the exam, not for sections A and B (but there is an inbuilt calculator that you can use).
You really should try the specimen computer based exams on the ACCA website.Sir,
There is another question in BPP kit :
Block Co operates an absorption costing system and sells three types of product – Commodity 1, Commodity 2 and
Commodity 3. Like other competitors operating in the same market, Block Co is struggling to maintain revenues
and profits in face of the economic….In this question also they have applied Budgeted – actual while calculating sales quantity variance..
They have done precisely as I wrote in my previous reply.
They have compared the actual total sales at standard mix with the budget sales.
(They show the workings differently then the workings I show in my lecture (the cost at the average standard profit) but doing it the way I show in the lecture is more logical and (of course) gives exactly the same answer.
Actually sir just one last question what is the difference between quantity and volume ? Aren’t they the same terms? (Except volume is used to measure somethings in liquid and quantity to solid materials )
And if so why is there 2 different formulas around it ?In the context of variances, the sales volume variance is just as in ‘basic’ Paper MA variances – the difference between budget total sales and actual total sales.
When more than one product is involved, this can be analysed into how much is due to the total quantity changing, and how much is due to the mix changing.
- The topic ‘Variance’ is closed to new replies.