• Skip to primary navigation
  • Skip to main content
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
    • BT
    • MA
    • FA
    • LW
    • PM
    • TX-UK
    • FR
    • AA
    • FM
    • SBL
    • SBR
    • AAA
    • AFM
    • APM
    • ATX
    • Dates
    • What is ACCA

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

Planning and Operational variances

VIVA

Planning and Operational Variances: Please note that this lecture relates to Chapter 14 of the Course Notes and not Chapter 13 as stated in the lecture. The example is on page 78.

View all free ACCA F5 lectures >>This lecture is based on ACCA F5 course notes, download or view on line here >>

[jwplatform YYx77SLT]

Reader Interactions

Comments

  1. Chris says

    June 1, 2014 at 1:00 pm

    Another superb lecture and a god-send for us students.
    Thanks John.

    Log in to Reply
  2. marcie157 says

    May 30, 2014 at 7:57 pm

    I don’t know where did you get £20,000 when calculating planning variance. It shouldn’t been a £ 23,000 as original budget figure and then minus 17,170 (revised budget figure), which would give £5,830variance.

    Log in to Reply
    • John Moffat says

      May 31, 2014 at 6:23 pm

      It was a mistake – I must re-record the lecture 🙁
      However, there is an answer at the back of the course notes which is correct.

      Log in to Reply
      • qq419850428 says

        September 4, 2014 at 5:38 pm

        ?D ? Some piont. Much much Appreciation for every lectures given , and really really thanks to you , Passed 4 of my papers with these lectures

      • John Moffat says

        September 4, 2014 at 5:51 pm

        Chang – thank you very much for the comment 🙂

      • qq419850428 says

        September 4, 2014 at 5:57 pm

        Thanks too : )

    • qq419850428 says

      September 4, 2014 at 5:10 pm

      Should be 23000 , Found that too , why the students never correct our lecturer

      Log in to Reply
      • John Moffat says

        September 4, 2014 at 5:29 pm

        It is because they are all so polite 🙂

  3. cecel says

    May 28, 2014 at 11:48 pm

    Hi John,
    I just checked the answers for example 1 on planning and operational variances and I am a bit confused. The planning variance is stated as $5,830 (A) and not $2,830 (A) as stated by you. I noticed that in the planning variance, the operating statement only states the contribution per unit and not go on to deduct the overheads of $20,000 to state the profit. So for the exam what do I do? Which revised contribution/profit do I compare the actual to in the operational variance?

    Log in to Reply
    • John Moffat says

      May 31, 2014 at 6:26 pm

      It is obvious in the lecture that I picked up the wrong figure by mistake – I will re-record it 🙁

      The answer at the back is correct.

      In the exam you will not get asked for a full operating statement. However, it does matter whether you start with budget contribution and reconcile to actual contribution (and then subtract fixed costs to arrive at actual profit), or if you start with budget profit and end with actual profit. It makes absolutely no difference – there is not standard ‘layout’ for management accounts. What is important is the variances and the interpretation of them.
      (Obviously if the question were to specifically state that you were required to reconcile the contributions, then you would start with budget contribution)

      Log in to Reply
  4. John Moffat says

    May 6, 2014 at 10:49 am

    There is no mention of the fixed overheads being revised, and so they are still 20000 when calculating the revised profit.

    However the actual fixed overheads are 19500, so there is a fixed overhead operational variance.

    Log in to Reply
  5. Hathor says

    May 5, 2014 at 10:03 pm

    Hi John thanks for your explanation. As you were calculating based on Revised Budget Profit, I just need to add – Material, Labour and V.OH variances. I don’t think to add Fixed O/H variances (expenditure and volume). Am I right?

    Log in to Reply
  6. iluvgorgeous says

    November 13, 2013 at 8:44 pm

    how is budgeted profit is 20? is it not 23000? as per example

    Log in to Reply
    • John Moffat says

      November 14, 2013 at 4:46 pm

      Ooops – sorry 🙁

      The original budget profit was 23,000. Sorry – I will re-record the lecture.

      Thanks for pointing it out. (The rest of the answer is – I hope – correct)

      Log in to Reply
  7. periqueta says

    November 9, 2013 at 5:25 pm

    Hello,
    I have a question in relation to an exercise about this topic, operating and planning variances. I hope you can help me.
    The exercise is called “crumbly cackes” from BPP practise book (exam 6/9 amended)
    It requieres us to calculate total cost planning and operational variances. There is a budgeted production and sales of 50000 and an actual production and sales for 60000. When they work out the planning variance the use the the actual level of production instead the budgeted. Is that right? There are no revised level of production/sales.

    Thanks in advance for your help.

    Log in to Reply
    • periqueta says

      November 9, 2013 at 5:48 pm

      Is it because I should flexed the original budget, is’nt it?

      Log in to Reply
      • John Moffat says

        November 9, 2013 at 7:15 pm

        The problem is that there is more than one way of doing the calculations, and they give different answers!!

        The way that all the Study Texts do it (and our Course Notes and lectures, and the examiners own answer to Crumbly Cakes do it!), is to use the actual production throughout the calculations. This is the most sensible way (and you are right – it is because effectively the budget has been flexed if we were doing a full operating statement).

        The new examiner has set this topic once (in December 2012) – the question was called Truffle – and she did it a different (less sensible way). However she did say that the other way (the way that everyone else does it!) would get full marks.

        If you want to see the answer to Truffle done the standard way, then I have recorded a lecture on it which you can find on the main F5 page.

  8. osaheni says

    November 2, 2013 at 8:05 pm

    Hello,
    How do you calculate the sales mix variance and sales quantity variance?

    Log in to Reply
    • John Moffat says

      November 3, 2013 at 9:51 am

      It is covered in our course notes and also to my answer to question 4 of the June 2013 exam (which you can find linked from the main F5 page).

      Log in to Reply
      • eijamalcolm92 says

        November 26, 2013 at 7:11 pm

        Hello Sir,

        I cant seems to find your answer to question 4 of the June 2013 exam

      • John Moffat says

        November 26, 2013 at 7:30 pm

        Sorry – will put it back on
        Have you looked at the examiners answer on the ACCA webpage?
        If there is a problem, then say which part and I will explain.

      • eijamalcolm92 says

        November 26, 2013 at 11:46 pm

        Hello,

        Yes I’ve looked through the examiner’s answer and attempt few times its just that by watching you explain and answer the question makes me more understand and could easily remember. Thanks anyway!

  9. mahoysam says

    May 25, 2013 at 12:23 pm

    So, say I got a question on planning and operational variances and I was asked to prepare an operating statement, will I start the operating statement by putting the original budget, planning variance and then the revised profit. then when we come to list the costs we will include the sales volume and price variances with the costs? I know my question is similar to fabiangrey’s question but I do apologise as I didn’t get your answer much.

    My point is that usually we start the operating statement with the original budget profit, sales volume variance and then sales price variance, here we started it differently, is this another form of operating statement for operational and planning variances and do I need to learn how to produce that? Thanks a lot.

    Log in to Reply
    • John Moffat says

      May 25, 2013 at 12:56 pm

      It actually makes the operating statement for useful / meaningful. However you will not be asked to produce a full operating statement – only extracts.

      Log in to Reply
      • mahoysam says

        May 25, 2013 at 1:00 pm

        Oh, it is because in my revision kit I had questions asking me to produce an operating statement (in basic variances section), but anyways, since I know how to produce full one, I can produce the extracts.

        Thanks a lot Mr John.

  10. fabiangrey says

    May 22, 2013 at 4:06 am

    Do we still need to include both Sales Variances (Volume & Price) and put them in the Operating statement after revised budgeted profit as well as the Cost Variances? thanks,

    Log in to Reply
    • John Moffat says

      May 22, 2013 at 5:41 am

      Yes. All the operational variances are exactly as normal except you are comparing actual with revised standards (or with original if they were not revised).

      The examiner will not set a full operating statement but she can ask any of the individual variances that would appear in the operating statement.

      Log in to Reply
      • fabiangrey says

        May 23, 2013 at 2:01 am

        okay, many thanks!

  11. tauraiversatile says

    May 19, 2013 at 8:01 pm

    Good lecture, only that I don’t understand why the Original Budget profit is 20000 and not 23000. Did I miss something?

    Log in to Reply
    • John Moffat says

      May 19, 2013 at 9:06 pm

      The original budget profit is indeed 23,000. See the lecture at 4 minutes 15 seconds.

      Log in to Reply
      • tauraiversatile says

        May 20, 2013 at 10:58 pm

        Oh ok, thanks then.

  12. fabiangrey says

    November 28, 2012 at 3:34 am

    Please explain how you reached the Price Variance of 600(A)?
    You calculated it as:
    (81,000 – (5,100 x 16))
    = 600(A)

    From my understanding Price Variance is calculated like so:
    (Actual Selling Price – Standard Selling Price) x Actual Sales
    (15.88 – 16) x 81,000
    = 9,529(A) ?

    Please let me know as I’m very confused now :$

    Log in to Reply
    • aidenhong says

      November 29, 2012 at 7:52 pm

      @fabiangrey, i think u should ( actual selling price – STD selling price ) x actual sales units. and why u have to divide the actual sales to make it selling price per unit. since u have to times it again…. sorry if im wrong, hehe , i will leave it to the expert to explain.

      Log in to Reply
    • aweqib says

      January 22, 2013 at 3:39 pm

      please multiply (16-15.88235) with no. of units sold, i.e., 5100, not Revenue ,i.e., 81000.

      Log in to Reply
  13. kgurley says

    October 20, 2012 at 8:03 pm

    Original budget is $23, 000

    Log in to Reply
    • John Moffat says

      November 6, 2012 at 7:06 pm

      @kgurley, The original budget profit is 23,000, but the original budget contribution is 43,000.
      If you watch the answer (or look at the back of the course notes at the answer) you will see that the answer starts with the budget contribution and reconciles to the actual contribution, and then subtracts the fixed overheads.
      This is a perfectly acceptable layout.

      Log in to Reply
  14. Miss A.. says

    October 10, 2012 at 11:21 pm

    Dear Sir,please illustrate that how could we calculate variable overhead expenditure variance in the above example?

    Log in to Reply
  15. riannaramrick says

    October 2, 2012 at 12:22 am

    Must practice these planning and operational variances a bit more its quite confusing at some times. Good lecture though.

    Log in to Reply
  16. alida bissa says

    June 10, 2012 at 10:45 pm

    i figured out that mistake

    Log in to Reply
  17. Et says

    May 26, 2012 at 12:34 pm

    @fotini, As danozo explains it below he lecturer may hae picked $20,000 by mistake and carried on using this wrong figure. But if you check the answer at the back of the course note the budgeted figure of $ 23,000 is used and the planning variance is $5830A not & $2830A.

    Good Luck on your Exam/s.

    Log in to Reply
    • Et says

      May 26, 2012 at 12:36 pm

      @Et, Correction “may hae” May have

      Log in to Reply
  18. danozo says

    May 17, 2012 at 5:55 pm

    The figure for the revision variance should have been $5830 A and not $2830 A. The lecturer mistakenly picked $20,000 as the figure for the original budget profit instead of $23,000, culminating in a difference of $2830 A.
    The operating statement should have read:
    $
    Original Budget profit 23000
    Planning variance 5830 (A)
    Revised Budget profit 17170

    Log in to Reply
  19. sardarrizwan says

    April 28, 2012 at 6:03 pm

    thanks…………..!

    Log in to Reply
  20. caglaremua says

    April 7, 2012 at 10:39 am

    thank you very much for these fantastic lectures!! I think original budget profit on the operating statement should be 23,000 not 20,000 and therefore planning variance should be 5,830 ??

    Log in to Reply
    • anneacca2014 says

      May 1, 2012 at 6:12 pm

      @caglaremua, I agree…I would think the original budget profit should be 23000

      Log in to Reply
    • vinai says

      May 12, 2012 at 10:25 pm

      @caglaremua, yes you are correct

      Log in to Reply
Newer Comments »

Leave a Reply Cancel reply

You must be logged in to post a comment.

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in