Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Reconciliation under absorption costing
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John Moffat.
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- May 3, 2024 at 3:53 pm #704894
The 20YY outcomes for Wellness Factory are outlined below:
The sales target for 20YY was 2,000 units at €30 per unit.
Each football’s standard absorption cost was €21, and the standard contribution per football was €18.
In 20YY, actual results were as follows:
2,100 footballs were sold for €168,300, with non-production overheads totaling €34,500.
The variances computed were:
Sales volume variance: €4,200 (favorable)
Sales volume contribution variance: €5,400 (favorable)Hello tutor, I have a question relating to this exercise of reconciliation under standard absorption costing. I understand that we have to start with budgeted profit and then adjust it with sales volume variance to come to standard profit on actual sales. But the sales volume contribution variance is never in use. I do not understand why we only use volume variance but not volume contribution variance in this reconciliation issue?
Thank you tutor!
May 4, 2024 at 7:35 am #704919You have not stated what it was that the question was asking you to calculate.
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