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In part c) they have mentioned that as regards sales price there is a $23360 favourable operational variance and $54680 adverse planning variance whre they got these figures from and in the last paragraph they have told that the total variance relating to sales is 28280 how did they get this?
The sales price operational variance is the net total of the operational variances for the three commodities.
Commodities 1 and 2 are given in the question, and the calculation for commodity 3 is shown in part (a) of the answer.So the total of 35,760 (A), 25,840 (F) and 33280 (F) is 23,360 (A)
(Similarly for the planning variance – simply take the net total of the three individual planning variances.)
The total sales variance of 28280 (A) is the net total of the sales price variances (31,320 (A)), the sales mix variance (13,366 (A)), and the sales quantity variance (16,406 (F)).
Sir i have another doubt regarding this same question if 23360 is adverse as u mentioned above then how are they saying in part c that 23360 is a favourable operational variance and 54680 has been mentioned as adverse in the answer so i’m confused about this bit
Could you explain how will i determine whether one figure is adverse and favourable my mind is messed up with all the information because i’m worked up because of the exams nearingSorry, I mistyped – it is 23360 (F)
Treat adverse variance as negative and favourable variances as positive.
So….. – 35760 + 25840 + 33280 = + 23360 (positive, so favourable)
Hi i would like to know how the revised selling price for commodity 3 was calculated plz.. the $39.10 thanks
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