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Hello,
You have mentioned there are two ways of calculating planning/operation variances, are they both still accepted?
i.e, the method I have been using for example, material price planning variance is:
actual usage x (revised cost – original cost)
Wanted to double check your method is still accepted, as I just done a mock exam through kaplan, and on the answer sheet, it only has one method, and it isn’t the above.
Thanks.
Both methods are still accepted.
But what you have written is not quite correct – for the price planning variance, it is actual purchases x (revised cost – original cost).
If you are using a current edition of the Kaplan exam, then I am surprised if they are still using the other method (but I cannot check because I do not have the Kaplan books – only the BPP books).
In the answer sheet they have calculated it as:
revised standard usage at actual output x (revised cost – original cost).
But as long as the method, you’ve corrected above, is accepted that’s great.
Thanks for the help.
It is accepted – it is the method that the current examiner prefers (even though either method is accepted).
(the answer on your answer sheet is using the method that the previous examiner preferred, and it is strange that your book uses it (unless it is an old edition) )
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