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correct me if I’m wrong.
There are :-
2 types of variances for materials (price & usage)
3 types of variances for labour (rate, efficiency & rate)
2 types of variances for variable OH (expenditure & efficiency)
4 types of variances for fixed OH (expenditure, capacity, efficiency & volume)
3 types of variances for sales (selling price, 1 volume for ac & 1 volume for mc)since there are 2 types of ways to calculate sales volume (depending if it asked to use ac or mc), is this the formula?
i) (AC) sales volume = (budgeted quantity – actual quantity) x standard full cost per unit
ii) (MC) sales volume = (budgeted quantity – actual quantity) x standard variable cost per unitAs for the chapter of performance measurement, how many decimal places should we give for :-
i) ROCE
ii) asset turnover
iii) current ratio
iv) gross & net profit margin
v) acid test ratio
vi) gearing
etc?p.s I have sat for the exam in June 2014 and during the exam, I faced this problem where I was not told of how much decimal places to use for my answers in MTQ.
Variances for materials – correct
Variances for labour – no. You have listed rate variance twice. It is rate, efficiency, and idle time
Variances for variable OH – correct
Variances for fixed OH – correct (but remember that capacity plus efficiency = volume. They are an an analysis of the volume variance)
Variances for sales – OK (although there is really just price and volume, it is just that there are two ways of calculating the volume variance depending on whether absorption or marginal costing)
Formula for sales volume variance:
What you have typed is wrong.
With absorption costing, you multiply (budget quantity – actual quantity) by the standard profit.
With marginal costing you multiply by the standard contribution.There is no rule for the exam about decimal places. Questions do usually state (most commonly it says to the nearest %). If it does not say, then generally do them to 2 decimal places.
(Unless the question did specifically say, then you will get the marks if you work to two decimal places whether you are doing the paper exam or the computer based exam)
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