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How is budgeted profit minus sales variances equals actual sales minus standard cost of sales? i just cannot connect the dots.
From: Page 312, Further variance analysis, Management accounting study text BPP learning media 2010
I do not have the BPP Study Text, only the Revision Kit.
The total of all the variances (sales and expense variances) explains the difference between the actual profit and the budget profit.
If the expenses were all at standard cost then there would be no expense variances and instead of ending up the the actual profit we would end up with the actual sales revenue less the standard cost of the sales.
This would be a very strange question to ever appear in the exam 🙂
Have you watched my free lectures on variance analysis? The lectures are a complete free course for Paper MA and cover everything needed to pass the exam well. If you are watching the lectures then you do not really need the Study Text – the essential book however you choose to study is the Revision Kit because it is full of exam standard questions for practice 🙂
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