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Prices variances (BPP 15.43)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Prices variances (BPP 15.43)

  • This topic has 3 replies, 2 voices, and was last updated 5 months ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • January 29, 2025 at 2:35 pm #715044
    Aynur02
    Participant
    • Topics: 17
    • Replies: 18
    • ☆

    A company uses a standard absorption costing system. Actual profit last period was $25,000, which was $5,000 less than budgeted profit. The standard profit on actual sales for the period was $15,000. Only three variances occurred in the period: a sales volume profit variance, a sales price variance, and a direct material price variance.

    Which of the following is a valid combination of the three variances?

    Sales volume profit variance | Sales price variance | Direct material price variance
    $15,000 A | $2,000 F | $8,000 F
    $5,000 A | $2,000 A | $2,000 F
    $15,000 A | $2,000 A | $8,000 A
    $5,000 A | $5,000 F | $5,000 A

    Sir, in this question, I can calculate the sales volume profit variance, but I don’t understand how to calculate the others. Can you help me?

    January 30, 2025 at 9:21 am #715064
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    The question does not require you to calculated the variances (and there is not enough information to be able to do this anyway).

    It asks which of the combinations is a valid combination which means which of them is possible.

    The total of all three variances must be equal to the difference between the actual profit and the original budgeted profit.
    The total of the sales price and material price variances must be equal to the difference between the actual profit and the standard profit on actual sales (i.e. the flexed profit).

    Have you watched our free lectures on variances?

    January 30, 2025 at 6:36 pm #715081
    Aynur02
    Participant
    • Topics: 17
    • Replies: 18
    • ☆

    oh Thank u Sir, I will start watching all of your videos asap

    January 31, 2025 at 10:13 am #715100
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    You are welcome 🙂

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    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Prices variances (BPP 15.43)’ is closed to new replies.

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