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Variance Analysis

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Variance Analysis

  • This topic has 7 replies, 4 voices, and was last updated 4 years ago by John Moffat.
Viewing 8 posts - 1 through 8 (of 8 total)
  • Author
    Posts
  • September 22, 2020 at 7:34 pm #586420
    Jivesh Seeam
    Member
    • Topics: 19
    • Replies: 6
    • ☆

    The finance director of Paint Mixers Ltd has produced the table below showing the variance
    results for the first three months of the year:
    January February March
    Material price variance $3,000 A $2,000 A $1,000 A
    Material mix variance $2,000 A $750 A $100 F
    Material yield variance $4,000 A $2,000 A $50F
    Which of the following interpretations of the variances analysis exercise above is NOT
    correct?
    A The purchasing manager should be able to threaten to switch suppliers to get better
    deals and address the adverse material price variance
    B The materials mix variance is entirely under the control of the production manager
    C The favourable yield variance in March could be the result of operational efficiency
    D The responsibility for the initial poor performance must be borne by both the
    purchasing manager and the production manager

    The answer is D.. The production manager controls both the mix and the production process and must
    alone bear responsibility for this initial poor performance.

    But the above question has material price variance also which is adverse.. isn’t it the responsibility of the purchasing manager also? so does the purchasing manager not responsible for the poor performance?? Why only production manager?

    September 23, 2020 at 8:42 am #586445
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54659
    • ☆☆☆☆☆

    Assuming that you have typed out the whole question correctly, then I agree with you that the purchasing manager also bears responsibility 🙂

    If this is a question from the current edition of the BPP Revision Kit, then tell me the number of the question so that I can check the wording myself.

    October 17, 2020 at 11:53 am #589505
    learner10
    Participant
    • Topics: 22
    • Replies: 5
    • ☆

    sir, it is from the kaplan revision kit … the question no. is 153 page 52. I have the same problem.

    October 17, 2020 at 2:11 pm #589536
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54659
    • ☆☆☆☆☆

    I do not have the Kaplan Kit and cannot add anything to my previous answer 🙂

    October 22, 2020 at 6:54 pm #591134
    kehinde
    Participant
    • Topics: 0
    • Replies: 2
    • ☆

    ACCA PAST EXAM
    MARCH/JULY 2020

    How was AQBM calculated ?

    RLE. ICL. Total
    AQAM 4,130 960. 5,090
    AQBM 3,764.79. 1,325.21 5,090???
    BQBM 3,750. 1,320. 5,070

    October 23, 2020 at 8:14 am #592904
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54659
    • ☆☆☆☆☆

    5,090 is the actual total number of treatments.

    The actual quantity at budgeted mix is for RLE: (3,750/5,070) x 5,090 = 3,764.79 and for ICL is:
    (1,320/5,070) x 5,090 = 1,325.21

    Have you watched my free lectures on mix and yield variances? The lectures are a complete free course for Paper PM and cover everything needed to be able to pass the exam well.

    October 23, 2020 at 9:27 pm #592988
    kehinde
    Participant
    • Topics: 0
    • Replies: 2
    • ☆

    Thanks a bunch 🙂 I just started watching your videos

    October 24, 2020 at 10:50 am #593008
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54659
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 8 posts - 1 through 8 (of 8 total)
  • The topic ‘Variance Analysis’ is closed to new replies.

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