- This topic has 3 replies, 2 voices, and was last updated 9 years ago by
.
- Posts
Sir, i have 2 query in this example
1) they did not calculate the USAGE variances for Bedsheets, is it because the budgeted units and actual units are same ? i.e 120,000
2) material USAGE OPERATIONAL variances i got 20000 favorable and BPP answer shows 20000 Adverse. can you pls explain why they are showing adverse, my working is as below
Actual usage = 95000 m2
Actual usage should have been on revised budget (180,000 x (0.5 x 10% increase) 0.55) = 99000 m2
So, actual usage is less than the revised budged, i.e 4000 m2 so it should be a favorable, isn’t it ?
BPP’s answer is correct overall, but they have made two errors. Firstly they have only calculate the variances in total, whereas the question asked for them in total and also for bedsheets and pillow cases separately.
Secondly, the statement “This applies to pillow cases only” should not appear under the material usage operating variance in the answer – it is a typing error.
You are better looking at the examiners own answer which you can find here:
https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/f5/exampapers/f5-2013-dec-a.pdfThere is a usage variance for bedsheets because the actually used 248,000 m2 whereas the standard usage for the actual production is 120,000 x 2 m2 = 240,000
There was no change in the standard usage for bedsheets, so the revised usage for the actual production remains at 240,000 (so no usage planning variance).
However there is a usage operational variance because they actually used 248,000.Again, best is to look at the examiners own answer, and if you still have problems then do watch my free lectures on materials planning and operational variances.
Thank you for the Link Sir,
I understood it completely now.
Thanks again for you support.
- You must be logged in to reply to this topic.