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PM Chapter 13 Questions Standard Costing and Basic Variance Analysis
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surprisingly got 100%, thought i’d get the last one wrong , very tricky.
Hello Sir, Question 1 has throw me off a bit.
AqAp =204750
AqSp = 210000
5250
Where I am confused is that, what we spent is under what we budgeted for. So I do not understand why it is a favourable variance instead of Adverse.
Sorry I meant why it is an adverse instead of it being a favourable variance
The question as asking about sales variances – it has nothing to do with spending.
Hello Sir, Question 1 has throw me off a bit.
AqAp =204750
AqSp
No 5 tricky indeed!
Picked 62,500 without deducting the variance.
Thanks
Amazing Test Sir ! I Got 100%. No 5 was tricky though. 馃檪
Great 馃檪
Thank You John, your lectures are indeed fruitful
Thank you for your comment
Hello,
Could you correct my logic for #5:
Actual fix.o/h = 0.98 Bud.fix o/h, => Bud.fix o/h = 1.02 Actual fix.o/h
So equation is: Actual fix.o/h – 1.02 Actual fix.o/h = 1250 ( suppose here should be minus 1250, because it’s adverse var., am I right?)
Finally we get: Actual fix.o/h = 1250 / 0.02 = 62.5 k (eliminated minuses). Budgeted fix. o/h would be = 62.5 k + 1250.
Thank you.
Your first line is wrong. Budgeted fixed overheads = actual fixed overheads / 0.98 = 1.020409 x actual fixed overheads.
Could you share correct one.
Thank you,
Igor
Dear John, in marginal costing there is no fixed overhead , how fixed overhead variance arises in marginal costing,thank you.
Of course there are fixed overheads!!! 馃檪
They are not absorbed into the unit cost, but they exist and reduce the profit. If the actual fixed overheads are different from the budget figure then the profit will be different and there is a variance (but only an expenditure variance, there is no volume variance).
I do suggest that you watch my free lectures on this where I explain!