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Dear Mr.John,
Good day
I’m not convinced with the solution suggested for part (b) regarding the planning and operational variances for the price and the the usage of material, correct me if I’m wrong, as per my understanding the total material price variance figure must be equal to the sum of Material price planning variance and Material price operational variance. and likewise for the Material Usage variance.
Appreciate your help.
Regards
There are two ways of dealing with planning and operational variances.
The answer to securenet does it the way that the student accountant article does it. It is the more sensible way, but the individual price variances do not add up to the total price variances (and same for usage variances). This is the way that most textbooks (and opentuition) do it.
The examiners answer to the question in December 2012 exam does it a different way, and then they do add up. However she made it clear that the alternative way would have got full marks (even though it gives a different answer).
If you want to see the alternative answer to Decembers question then there is a link to it on the main F5 page of this website.please provide the link for the alternative answer. i can’t find it on open tuition.
As I wrote before it is an alternative answer to the December 2012 question (not to SecureNet).
The link is here:
https://opentuition.com/acca/f5/f5-december-2012-question-2-planning-and-operational-variances/However do not confuse yourself by learning two ways.
Dear,
I have used this method for secure net.
operational price variance = (actual price – std price)X actual kgs
planning price variance = (std price – revised price) X actual kgsoperational usage variance = (actuals kgs for actual production – revised kgs for actual production) X std kg
planning price variance = (std kgs for actual production – revised kgs for actual production) X std price.Please confirm if i can use this method. (like in Truffle and Bedco Manufacturers Dec 2013)
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