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July 30, 2022 at 7:37 pm
Would it be right to say about Planning and Operational variance that Planning variance compares the standard budget with flexed budget. And the operational variance compares the flexed budget with the actual performance.
John Moffat says
July 31, 2022 at 8:39 am
No, it would not be right. The flexed budget is only the original budget adjusted for the actual level of activity. With planning and operational variances we revise for changes in the standard costs etc..
March 20, 2022 at 4:03 am
hello sir I am really thankful because i get open tuition,
the lecture is really digestible , however as usual I have a question,
1,why planning and operational variance sum is compared to variance analysis and how it is related with accessing the mangers problem or operational problem?
March 20, 2022 at 7:34 am
One of the main reasons for doing variance analysis is to see how well (or badly) managers are doing their job. As an example, if the purchasing manager is paying more than was budgeted for materials then it looks bad. However, if the reason is that the supplier increased prices it is not fair to blame the purchasing manager. Operational variances compare what was actually paid with what they should realistically have paid (after taking account of the increase in prices) rather than what was originally budgeted.
July 24, 2021 at 9:48 am
I wanted to ask why are we comparing the actual cost with the revised cost in Operational Variance, as the actual cost is the one which has been occurred where as the revised cost is the one which has been found after the production has been taken place. Can you please tell me what is the reason for this comparison?
Thanks in advance.
July 24, 2021 at 3:21 pm
The revised cost is the new standard cost and is revised because for whatever reason the original budgeted cost was not realistic. For example, it could be as simple as suppliers have increased their prices. We separate planning and operational variances in order to identify anything that has gone wrong in operations.
August 29, 2020 at 9:55 pm
How are you?
I hope you are great.
Thank you for your nice informative lecture lesson.
August 30, 2020 at 8:09 am
Thank you for your comment 🙂
April 4, 2021 at 6:15 am
Wow, interesting and easy to digest.
April 4, 2021 at 9:02 am
Thanks for the comment 🙂
November 24, 2018 at 1:03 pm
Hi, with reference to example 1, in operational variance calculation for usage, why did not use the revise change in price per kg rather than the standard price per kg? Since we have been knowledge that the price has been changed.
November 24, 2018 at 1:31 pm
Same issue in example 2.. please advise.
June 10, 2019 at 11:42 am
Some people prefer to do that. However the current examiner prefers it the way that I show it in my lectures – keeping the two things completely separate.
November 11, 2018 at 5:37 am
Can there be a question for preparing graphs for other topics?
November 11, 2018 at 9:36 am
No – you cannot be asked to actually draw any graphs in the exam, but you can be tested that you understand them.
June 10, 2019 at 9:51 am
Any response to khussaini quest on the use of revised and standard price ?
June 10, 2019 at 11:41 am
I will answer him now, but I do not always see comments posted here. That is why we have the Ask the Tutor Forum where questions are always answered within 24 hours!
November 8, 2018 at 7:10 am
Thanks for this brilliant lecture. For planning and operational variance we compare the original budget with the revised budget.
November 8, 2018 at 7:13 am
Planning = original budget Vs revised budget
Operational = actual performance Vs revised budget
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