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Bassic variances

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Bassic variances

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
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  • December 9, 2021 at 6:04 pm #643521
    Natasha1996
    Member
    • Topics: 34
    • Replies: 22
    • ☆☆

    Are these all correct statements regarding basic variance (chap 13 example 1)?

    1) Budget cost is the total cost that we expect to happen and it is calculated as:

    Budget cost = Budgeted Production units x Standard rate
    $591600 = 8700 x $68

    Is it correct that total budget cost is also called total standard cost (they mean same)?

    2) Standard cost is the per-unit cost that we expect to happen which will be used to compare with actual results at the year-end and it is calculated as:

    Standard cost = Total Budgeted cost / Total Budgeted Production
    Standard cost = $591600 / 8700

    Is it correct that standard cost per unit is also called standard cost per unit (they mean same)?

    3) Actual cost is the total actual cost incurred at the year-end and it is calculated as:

    Actual cost = Actual Production units x Standard rate
    –605200—-=———–8900—————-x———$68

    4) In all the basic variances we compare the actual cost with standard cost with actual production to see the variance at the year-end.

    Actual costs———–605200
    Standard costs——-591600
    Total variance——–$13600

    Sorry to ask again but I was confused. Please don’t mind 🙂

    December 10, 2021 at 8:41 am #643666
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51952
    • ☆☆☆☆☆

    That all seems to be correct 🙂

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