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Variance

GGarvit6y ago
Actual profit 25000 budgeted profit 30000 Standard profit from actual sales 15000 Calculate sales volume profit variance Sales price variance Direct material price variance Ans- sales volume profit variance 15,000 adverse Sales price variances 2000 favourable Direct material price variance 8,000 favourable I don't know how they have calculated. Thank you sir
John MoffatJohn MoffatTutor6y ago#1
The difference between the standard profit from actual sales and the budgeted profit is 15,000 adverse and this is the sales volume variance. The difference between the actual profit and the budget profit is 5,000 adverse and so this is the total of the sales price and the material variances. Therefore the total of the sales price and the material variances must be 10,000 favourable. There is not enough information to be able to calculate the sales price and material variances separately, but if you look at the question I think you will find that there are several choices and only one of them has a sales volume of 15,000 adverse, and sales price and materials variances that add up to 10,000 favourable.
GGarvit6y ago#2
Thankyou sir for quick reply
John MoffatJohn MoffatTutor6y ago#3
You are welcome :-)
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