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Hello John, i was practicing cbe sample exams and a question came up which asked me to find the budgeted profit and standard profit from actual sales was given, also given was sales price variance and sales volume variance. The answer only included the sales volume variance ignoring the price variance.
However in the BPP study guide for F2 i have learned that standard profit from actual sales is obtained by deducting both sales volume variance and sales price variance. (BPP study text 2010, page 312)
I am kinda confused and clarification would be helpful, thanks.
The only difference between the standard profit on actual sales and the budgeted profit is the sales volume variance.
Obviously the actual profit on actual sales will also be affected by the sales price variance and all the cost variances.
I do not have the BPP Study Text (only the Revision Kit) and so I cannot comment on what appears there.
Have you watched my free lectures on variances? The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.
Thanks John, just to be clear standard profit from actual sales and actual sales minus standard cost of sales are same thing right?
No.
The standard profit from actual sales is the actual sales at standard selling price less the standard cost of the actual sales.
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