Good Day Sir!
Please explain the solution of this question of variance.
The use absorption costing, because fixed overheads are included in the cost card.
The actual selling price was higher than standard because the sales price variance is favourable.
The actually sold 1,200 less than budgeted, because the sales volume variance is adverse and 60,000/50 = 1,200
The standard sales revenue for the actual sales is 150/50 x 540,000 = 1,620,000. The sales price variance is 20,000 favourable, so the actual sales revenue = 1,620,000 + 20,000 = 1,640,000.
The production is 100 units less than budget because the fixed overhead volume variance is 2,000 adverse, and 2,000/20 = 100.
For materials, they paid less than standard price because the materials price variance is favourable.
The used 320kg more than the flexed budget because the usage variance is adverse, and 8,000/25 = 320.
Thank you so much Sir!
You are welcome 🙂
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