Revision Notes Planning and Operational Variances Question

Hi John

Quick question on the revision notes, the way the solution is done seems to differ to the way you explained it in your lecture notes unless I am mistaken which I have known to be more often than not 😉

Planning Expenditure Variance
You used in the solution “Revised Standard Purchases” where your main lecture notes uses “Actual Usage”

So My Planning Expenditure Variance Would be:

Actual Usage at revised std cost: (110,000kg @ $22) = $2,420,000
Less Actual usage at original Std Cost (110,000kg @ $20) = $2,200,000
=$220,000(A)

Then I concurred with your Planning Usage Calculation as is

I also concurred with your Operational Expenditure

Then for Operational Usage you multiplied the answer by Revised Std Cost where I thought it was to be Original Std Cost?

So my version would be:

Actual Usage 110,000kg
Less Revised Std Usage for actual production (55000 x 1.9kg) = 104500kg
= 5500
x Original Std Cost $20
= $110,000 (A)

Thanks again

Hugh