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variance analysis

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › variance analysis

  • This topic has 3 replies, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
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    Posts
  • November 24, 2018 at 6:36 am #485746
    william2018
    Member
    • Topics: 11
    • Replies: 12
    • ☆

    W Ltd uses a standard marginal costing system. The following data relates to one of its products.

    selling price: $ 27/unit
    variable cost:$12/unit
    fixed cost :$9/unit
    profit :$6/unit

    Budgeted sales for control period 7 were 2400 units, but actual sales were 2550 units.The revenue earned from these sales were $67320.

    Profit reconciliation statements are drawn up using marginal costing system. Whar sales variance would be included in such a statement for period 7?

    A. price variance: $1530(A) volume variance: $900(F)
    B. price variance: $1530(A) volume variance:$2250(F)
    C. price variance: $1530(A) volume variance: $2250(A)
    D. price variance: $1530(F) volume variance : $2250(F)

    The correct answer is B

    I have been able to calculate volume variance by (2550-2400) x (27-12)= $2250(F)

    however I did not been able to calculate price variance

    I would be grateful if you can help me sir.

    November 24, 2018 at 9:33 am #485771
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54796
    • ☆☆☆☆☆

    The actual sales at standard selling price = 2,550 x $27 = 68,850.
    The actual sales at actual selling price = $67,320

    Therefore the sales price variance is 68850 – 67320 = $1,530 adverse

    I do suggest that you watch my free lectures on this. The lectures are a complete free course and cover everything needed to be able to pass the exam well.

    November 24, 2018 at 4:55 pm #485829
    william2018
    Member
    • Topics: 11
    • Replies: 12
    • ☆

    Thank you, sIr for your precious explanation.

    November 25, 2018 at 9:54 am #485901
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54796
    • ☆☆☆☆☆

    You are welcome 🙂

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    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘variance analysis’ is closed to new replies.

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