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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Cost variance

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- April 23, 2022 at 12:13 pm #654330
A company incurred the following actual production costs at output of 25,600 units in a period

$

Prime costs

96,470

Overheads

79,750

Budgeted production costs for an output of 24,000 units were:

Prime costs

$3.70 per unit

$57,600 fixed costs plus $0.90 per unit variable costs

Overheads

What was the total cost variance in the period comparing actual costs with the flexed budget?

$860 Adverse

$8,220 Adverse

$860 Favourable

$8,220 Favourable

Firstly I’m confused where did we study cost variance in Fma syllabus, secondly i tried applying the formula that would give me 96470-88800= 7670, can you please help me out how to calculate total cost variance?

April 23, 2022 at 12:16 pm #654331Actually i figured the answer to be 8220 adverse is that correct?

April 24, 2022 at 6:44 pm #654364The total flexed cost is (25,600 x (3.70 + 0.90)) + 57,600.

Compare this with the actual total cost.

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