- This topic has 3 replies, 2 voices, and was last updated 8 years ago by
.
- Posts
1) Variable cost 8
Fixed cost 2
10
Standard profit 5
Standard selling price 15
The sales volume variance reported for last period was $9,000 adverse.
AD Ltd is considering using standard marginal costing as the basis for variance reporting in future. What
would be the correct sales volume variance to be shown in a marginal costing operating statement for the last period? the answer is $12600 F How did they come up with Favourable variance? 2) The budgeted contribution for HMF Co for June was $290,000. The following variances occurred during
the month.Fixed overhead expenditure variance 6,475 Favourable
Total direct labour variance 11,323 Favourable
Total variable overhead variance 21,665 Adverse
Selling price variance 21,875 Favourable
Fixed overhead volume variance 12,500 Adverse
Sales volume variance 36,250 Adverse
Total direct materials variance 6,335 Adverse. my question is, why wasn’t the fixed overhead variance not included in the calculation?Question 1:
Either you have copied the question wrongly or there is a typing error in your book.
If the sales volume variance using absorption costing is adverse, then the sales volume variance using marginal costing is adverse as well.Question 2:
You have not said what the question asked for!! Since you were given the budgeted contribution, presumably the question asked for the actual contribution. The contribution is the profit before fixed overheads, and so the fixed overheads are of no relevance.
i have typed the question exactly as text book..it must have been an error. thank you for the answers.
- The topic ‘stardard costing’ is closed to new replies.