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Sales volume variance confusion

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Sales volume variance confusion

  • This topic has 5 replies, 2 voices, and was last updated 3 years ago by John Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • May 12, 2022 at 5:43 pm #655482
    tayacca
    Participant
    • Topics: 12
    • Replies: 11
    • ☆

    Hi Sir Moffat,

    If I am given variable costs and sales price but the question doesn`t state which method to use to calculate it sales volume variance then by default should we use marginal costing principle or absorption costing principle?

    Many Thanks

    May 13, 2022 at 8:24 am #655523
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54674
    • ☆☆☆☆☆

    It is more likely to be marginal costing, but it depends on what information is given and whether or not the question specifies.

    If you are referring to a specific question in the BPP Revision Kit then say which question and I will explain.

    May 13, 2022 at 11:40 am #655538
    tayacca
    Participant
    • Topics: 12
    • Replies: 11
    • ☆

    Thanks John.

    Here is the question please taken from First Intuition book.
    Standard cost for producing one unit
    Direct Material 3.60
    Direct Labour 0.60
    Variable O/H 0.30
    Standard selling price 9.00
    Sales of 4600 units are budgeted each period. In the last period 4620 units were sold for 41,500.
    Answer is 90 Fav

    I guess as there is no Fix O/H given in standard cost card hence the use of Marginal costing principle?

    Many Thanks

    May 13, 2022 at 3:16 pm #655558
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54674
    • ☆☆☆☆☆

    That is correct in that since there is no information about fixed costs there is no choice but to use marginal costing for the variance.

    May 14, 2022 at 12:25 pm #655630
    tayacca
    Participant
    • Topics: 12
    • Replies: 11
    • ☆

    Thank you Mr Moffat.

    May 14, 2022 at 2:53 pm #655637
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54674
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 6 posts - 1 through 6 (of 6 total)
  • The topic ‘Sales volume variance confusion’ is closed to new replies.

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