There was question in Bpp
following data was given
Fixed budget:- 126100
Flexed budget:- 130855
Actual :- 133580
Q :- calculate volume and expenditure variance.
Volume variance i calculated using formula ( fixed budget- flexed budget)
And expenditure variance formula that i used was ( fixed budget - actual )
But in solution they used (flexed - actual)
Can you please explain
Ask the Tutor ACCA MA
Expenditure variance
5y ago#1Expenditure variances are always calculated by comparing the flexed with the actual.
The reason is all explained in my free lectures on variances.
The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.
But in Fixed oh expenditure variance formula is( budgeted expenditure - actual expenditure)
Thats why used this formula .
5y ago#3The way the information is given, it is clear that what is required is the total volume variance and the total variance for expenses (not for each type of expense because the information is not there).
The total variance is always comparing the flexed with the actual.
This applies to all expenses, including fixed overheads (the total fixed overhead variance is then analysed into the expense variance and the volume variances).
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