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Total variance

This topic has 1 reply, 2 voices, and was last updated 8 months ago by John Moffat.

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October 22, 2021 at 2:00 pm #638792
AshleyMarc1997
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If we are asked to calculate the Total variance in a question then are we required to calculate Total variance only or do we have to calculate a number of variances?

Is it also correct that Total variance can be calculated like this:
Actual Total cost – Standard Total cost = Total variance

Actual Total cost is the total cost spent on buying material Kgs;
Standard Total cost is the total cost expected on buying material Kgs;
October 22, 2021 at 4:20 pm #638809
John Moffat
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If you were asked for the total variance than that is all you would be required to calculate.

The total variance is the actual total cost – the standard cost for the actual level of production.

I do explain this in my free lectures on basic variances. However as I also make clear in my lectures, little is asked in Paper PM on basic variances (because they were examined in Paper MA) and most Paper PM questions on variances are on mix and yield or on planning and operational variances.
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