PM Chapter 13 Questions Standard Costing and Basic Variance Analysis
15 Comments
S
Sylvia·
surprisingly got 100%, thought i'd get the last one wrong , very tricky.
L
Leslie·
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.
L
Leslie·
Sorry I meant why it is an adverse instead of it being a favourable variance
J
John MoffatTutor·
The question as asking about sales variances - it has nothing to do with spending.
L
Leslie·
Hello Sir, Question 1 has throw me off a bit.
AqAp =204750
AqSp
K
Kriss·
No 5 tricky indeed!
Picked 62,500 without deducting the variance.
Thanks
K
KEVIN·
Amazing Test Sir ! I Got 100%. No 5 was tricky though. :)
J
John MoffatTutor·
Great :-)
T
Tanya·
Thank You John, your lectures are indeed fruitful
J
John MoffatTutor·
Thank you for your comment
I
Igor·
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.
J
John MoffatTutor·
Your first line is wrong. Budgeted fixed overheads = actual fixed overheads / 0.98 = 1.020409 x actual fixed overheads.
I
Igor·
Could you share correct one.
Thank you,
Igor
R
Rokhan·
Dear John, in marginal costing there is no fixed overhead , how fixed overhead variance arises in marginal costing,thank you.
J
John MoffatTutor·
Of course there are fixed overheads!!! :-)
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!
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.
AqAp =204750
AqSp
Picked 62,500 without deducting the variance.
Thanks
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.
Thank you,
Igor
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!