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Variance analysis

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Variance analysis

  • This topic has 3 replies, 2 voices, and was last updated 3 years ago by AvatarJohn Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • August 23, 2022 at 2:25 pm #664058
    AvatarSukuna
    Participant
    • Topics: 25
    • Replies: 37
    • ☆☆

    A company uses a standard absorption costing system. The following figures are available for the last
    accounting period in which actual profit was $108,000.
    $
    Sales volume profit variance 6,000 adverse
    Sales price variance 5,000 favourable
    Total variable cost variance 7,000 adverse
    Fixed cost expenditure variance 3,000 favourable
    Fixed cost volume variance 2,000 adverse

    What was the standard profit for actual sales in the last accounting period?

    I wonder why in this case “Sales volume profit variance” is irrelevant?

    thanks in advance

    August 23, 2022 at 6:04 pm #664082
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54836
    • ☆☆☆☆☆

    Because the question asks for the standard profit for the actual sales.

    The sales volume variance is the difference between the budgeted profit and the standard profit for the actual sales.

    August 27, 2022 at 9:41 am #664399
    AvatarSukuna
    Participant
    • Topics: 25
    • Replies: 37
    • ☆☆

    thanks

    August 27, 2022 at 10:33 am #664412
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54836
    • ☆☆☆☆☆

    You are welcome.

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Variance analysis’ is closed to new replies.

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