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Kaplan exam kit q93:
Hey, is it just me or this question is a bit dodgy/typo with the “favourable” variance ? I got 10,037kg for AQ. Thanks 🙂
Question:
https://app.box.com/s/rgqjom9bzs4sinbc4es84exo135rg0sq
Answer:
https://app.box.com/s/i7n591gy397v6gdyngmqkbf7utaa8t3tMy reasoning:
Favourable variance means we must’ve bought the materials in for cheaper than budgeted, so AQ*AP<AQ*SP. Price variance = $4,220 means AQ*SP=4,220+AQ*AP. SP=6 and AQ*AP=56,000 means 6AQ=4,220+56,000=60,220 so AQ=60,220/6=10,037kgHi Thanks for your question… Yep I agree with you on this one. The link to the answer assumes the price variance is adverse so actual price is more than standard price.
You are totally correct with your workings – but it does produce some ugly numbers (eg qty of actual kg is a decimal) – but I agree there is a typo in the model answer. ( or the question – perhaps they meant to say the price variance was adverse )
Many thanks
Cath
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