sir cud u show me how to do the sales quantity variance for this question though its not asked.using the total profit/total sales x sales quantity approach

The actual sales are 1,400. If they were sold in the same ratio as budget then it would be 700 units of each type of TV. Calculate the standard contribution from 700 of each, and compare with the contribution from 590 of each, and the difference is the sales quantity variance.

(You didn’t ask, but the sales mix variance would be calculated by calculating the standard contribution from 700 of each, and taking the difference for the standard contribution from the actual mix of 750 and 650 units).

i do the alternative method where they take the average std contribution per unit. in the rev kit they have done 220×185. they got 185 by doing 190+180/2 i didnt understand how this calculation

(b) You learn that the wood used to manufacture the trellis sets comprises three types: pine, balsa and redwood. Calculate and comment on the materials mix and yield variances using the information in the table below. (8 marks)

Budget per unit β Nov 2012 Std cost Actual β Nov 2012 Materials Wood β 25kg @ Β£3.20/kg 80.00 80,000kgs Comprising: Pine β 15kg @ Β£3.00/kg Balsa β 2kg @ Β£1.50/kg Redwood β 8 kg @ Β£4/kg 45.00 3.00 32.00 Pine β 48,000kgs Balsa β 6,400kgs Redwood β 25,600kgs

Is it that the mix had did not interfere with original standard???

How would I explain this???

Lol I thought so too that it was a silly question, why I panic. I thought I was doing something wrong. Thanks a million for your reply I really appreciate

The mix was in the same proportions as the original standard, so all that you can say is just that!! That there was no change in the standard mix. Maybe it could have been better to have more Balsa because it is cheaper and would have saved money, but that could mean that the trellis would not be so good which could lose them money. There isn’t really anything else that you could say π

in the exam, do we have to write each variance calculation formula first, such as: sales rpice variance= (actual price-standard price) x actual volume? Can we just use the numbers to calculate without writing the formula, any marks are allocated to those formulae?

There are no marks specifically allocated to writing down the formulae.

However it is worth showing a bit of workings because if you make a silly mistake and therefore get the wrong answer, you will still get some marks if it is clear what you are trying to do. If you just write down the answer with no workings at all, and it is wrong, then you get zero (even though it could just be a silly arithmetic mistake).

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Ryan says

sir cud u show me how to do the sales quantity variance for this question though its not asked.using the total profit/total sales x sales quantity approach

John Moffat says

The actual sales are 1,400. If they were sold in the same ratio as budget then it would be 700 units of each type of TV.

Calculate the standard contribution from 700 of each, and compare with the contribution from 590 of each, and the difference is the sales quantity variance.

(You didn’t ask, but the sales mix variance would be calculated by calculating the standard contribution from 700 of each, and taking the difference for the standard contribution from the actual mix of 750 and 650 units).

Hope that helps π

Ryan says

i got it….

Ryan says

i do the alternative method where they take the average std contribution per unit. in the rev kit they have done 220×185. they got 185 by doing 190+180/2

i didnt understand how this calculation

John Moffat says

Thats fine, but I think the way I do it is more logical (and easier to remember π )

sunday says

Thanks alot

Michael says

Excellent lecture as ever John, you make everything seem so easy!

John Moffat says

Thank you π

vee says

Thank you John for your help and your easy explanation.. I wish I had a teacher like you!!! Thanks a lot….. Well appreciated

vee says

(b) You learn that the wood used to manufacture the trellis sets comprises three types: pine, balsa and redwood. Calculate and comment on the materials mix and yield variances using the information in the table below.

(8 marks)

Budget per unit β Nov 2012 Std cost Actual β Nov 2012

Materials Wood β 25kg @ Β£3.20/kg 80.00 80,000kgs

Comprising: Pine β 15kg @ Β£3.00/kg

Balsa β 2kg @ Β£1.50/kg

Redwood β 8 kg @ Β£4/kg 45.00

3.00

32.00 Pine β 48,000kgs

Balsa β 6,400kgs

Redwood β 25,600kgs

John Moffat says

Are you asking a question?

vee says

Hi john, sorry yes I am. I have worked out the mix but keep getting the actual standard mix the same as actual mix which will make the difference 0.

That’s what I’m not sure about

John Moffat says

You are correct, and unless you have left something out of the question it means that both the mix and the yield variance are zero!!

I don’t know where the question came from, but it seems a remarkably silly question (but a very easy 8 marks π )

vee says

It’s actually a pass paper for my Uni…

Is it that the mix had did not interfere with original standard???

How would I explain this???

Lol I thought so too that it was a silly question, why I panic. I thought I was doing something wrong. Thanks a million for your reply I really appreciate

John Moffat says

The mix was in the same proportions as the original standard, so all that you can say is just that!! That there was no change in the standard mix.

Maybe it could have been better to have more Balsa because it is cheaper and would have saved money, but that could mean that the trellis would not be so good which could lose them money.

There isn’t really anything else that you could say π

vee says

Thks again!!!!

helensqq says

Thanks John,

in the exam, do we have to write each variance calculation formula first, such as: sales rpice variance= (actual price-standard price) x actual volume? Can we just use the numbers to calculate without writing the formula, any marks are allocated to those formulae?

John Moffat says

There are no marks specifically allocated to writing down the formulae.

However it is worth showing a bit of workings because if you make a silly mistake and therefore get the wrong answer, you will still get some marks if it is clear what you are trying to do. If you just write down the answer with no workings at all, and it is wrong, then you get zero (even though it could just be a silly arithmetic mistake).

15124 says

well explained many thanks

kam2189 says

Thanks!!!