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Standard costing

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Standard costing

  • This topic has 3 replies, 2 voices, and was last updated 5 years ago by AvatarJohn Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
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  • January 22, 2021 at 12:56 pm #607541
    AvatarPriyanka19
    Participant
    • Topics: 32
    • Replies: 20
    • ☆☆

    Is budgeted profit based on actual units?
    If so this means that we dont have to include sales volume variance while calculating actual profit? ?

    January 22, 2021 at 3:14 pm #607566
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54838
    • ☆☆☆☆☆

    The original budget profit is based on the budgeted results.

    Adjusting it by the sales volume variance gives the standard profit for the actual sales (i.e. the flexed budget profit).

    January 22, 2021 at 4:16 pm #607577
    AvatarPriyanka19
    Participant
    • Topics: 32
    • Replies: 20
    • ☆☆

    So this means if we are calculating actual profit we dont have to include sales volume variance in the calculation?

    January 23, 2021 at 9:36 am #607622
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54838
    • ☆☆☆☆☆

    If you start with the budgeted profit then you do need to include the sales volume variance.

    If you start with the standard profit for the actual sales, then you do not include the sales volume variance.

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