Cost variances

The question is asking for the fixed overhead capacity variance. They managed to work more hours than budgeted and therefore the variance is favourable. I do explain this and the reason for it in my free lectures on fixed overhead variances.

Thanks for your reply . Can you pls help me question 14a13 1- Based on your lecture : Actual purchase @ actual cost 110.000 Actual purchase @ standard cost = 50$ x actual kg purchase( which I can't find that actual kg) But The answer shows 50$ x 2000 unit . I'm confused with this 2000 unit . As this is unit produced , not Kg of material ? 2- On the top , the question show " " number of units produced budget -2200 and actual 2000 " Buf the bottom also show " the actual number of units produced was 2000" Should I understand it's the same actual unit produced ? As its repeated , so I'm confused . Thanks Mr.John

1. Your workings are the workings for the material expenditure variance. However the question does not ask for the expenditure variance - it asks for the total materials variance. The total variance compares the actual cost of the actual units produced with the standard cost of the actual units produced. 2. Yes - the actual units produced were 2,000 !

Thanks for your reply Question 14b3 from BPP I'm struggling with this question . I don't know where to start to calculate actual production . Can you pls show me the way ? Thanks Mr John

My workings for for 14b 3 : The difference between actual purchase @ actual cost ( $2400) and actual purchase @ standard cost is 800(A) . So actual purchase @ standard cost is 1600$ . It mean actual purchase is 800kg . But when I devide this 800kg with standard kg per unit ( 5kg ) . The results is only 160 units What should I do to have 200 unit ? Thanks Mr John

This is really the same logic as your previous question. The total materials variance is 800 - 400 = 400 adverse. The total materials variance is the difference between the actual total cost and the standard cost of the actual production. You know that the actual total cost is $2,400. You know that the standard cost of actual production is therefore 2400 - 400 = $2,000. You know that the standard cost per unit is $10. Therefore the actual production is 2,000/10 = 200 units.

Ahhhhhhh I've got it . I think it will be easier for me to calculate separately as what you taught in the previous chapter . So I'll have that 800 of actual kg when I calculate expenditure variance . And I'll use that 800kg to calculate usages variance , then I'll have units produced :))) Your calculation is the easiest to remember . Thanks Mr John ( pls don't close the topic . I have few questions to ask in the chapter

You are welcome. If you have more questions, but on different questions from the Revision Kit, then you must ask them in a new thread. The reason is that we do not offer free private tuition, and so our answers are for the benefit of all students - many use the search box to see if their problem has already been dealt with.