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Please sir,how do I solve a question with an actual output greater than it budgeted
Direct material (2kg/per unit)8.40
Direct labour (2hrs/per unit) 7.60
Variable ovh(1hre/unit)3.90
Fixed ohh(1hr/unit)5.10
Budget production 2000;
Actual 2150unitsActual cost
Dm 18100
Dl 14980
Variable ovh 8160
Fixed ovh 9950Ps:we are not given price per unit
Cal material cost variance
Labour cost variance
Variable cost variance
Fixed ovhThanks in advance
The difference between actual and budgeted output is only important for fixed cost variances.
Material. For actual output of 2150 units, material should cost 2150 x 8.4 = 18060. Actual was 18100 so 40 A variance
Similarly labour and variable OH.
Fixed OH. Budgeted was 2000 x 5.1 = 10,200. Actual was 9950 so a 250F expenditure budget.
150 units more than expected were made each absorbing 5.1 per unit so the FOH volume variance is 150 x 5.1 = 765 favourable.
If you need more on vatiance calculations, have a look at the PM notes, where that topic is covered in detail. At APM it is unlikely you will have to calculate variances: interpretation of variances is much more likely.
Will I need to use the budgeted and actual output to calculate usage , efficiency of labour and variable ovh?
How do I go abt that ?You seem to know little about variances. These are fully explained in our material for the Performance Management paper for which we have full notes and lectures (simple variance analysis is in Chapter 13). See:
https://opentuition.com/acca/pm/
Forums are not the place for us to reproduce that material and explanations fully covered elsewhere.
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