- This topic has 4 replies, 2 voices, and was last updated 2 years ago by Cath.
Viewing 5 posts - 1 through 5 (of 5 total)
Viewing 5 posts - 1 through 5 (of 5 total)
- You must be logged in to reply to this topic.
Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>
Forums › Ask CIMA Tutor Forums › Ask CIMA P1 Tutor Forums › BPP -2019
Hi,
Can you please help me with the below question on BPP?
“A company uses a st. absorption costing system. The following figures are available for the latest accounting period in actual profit was $210,000.
Sales profit volume variance 10,000 A
Sales price variance 7,500 F
Total Variable cost variance 9,000A
Fixed Cost Expenditure variance 5,000F
Fixed cost volume variance 3000A
What was the standard profit for actual sales in last accounting period? ”
Why don’t we consider the sales volume variance when we calculate back to get the answer?
Hi
The reason it is kept separate is that the sales volume variance used to flex the budgeted profit (budgeted units * std profit) and then this adjusted profit figure is reconciled via the other variances to obtain the actual profit figure in the proforma operating statement. Please see lecture below for a great explanation of this.
https://opentuition.com/cima/cima-p1/cima-p1-analysis-of-variances-operating-statement/
Many Thanks
Cath
Hi Cath,
Is that because the question asks ‘standard profit for actual sales in last accounting period’, not the original budget profit??
I passed P1. Thanks OpenTuition and the team.
you’re welcome – glad to have helped!