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Variance analysis revision note Answer A.

AAnna11y ago
I have a question regarding this reconciliation and variance analysis. In this example 53000 items sold and 55000 produced. Variance is calculated for materials for 55000. But then when profit is reconciled, in your answer actual profit 1222., whereas actual profit is 1118. 104 is the difference for unsold items. How should this be accounted for in the reconciliation statement? Thanks.
John MoffatJohn MoffatTutor11y ago#1
The actual profit is not 1118 - it is 1222. If you watch the free lecture then you will see why :-)
AAnna11y ago#2
the free lecture on which topic? could you please advise? Thanks.
John MoffatJohn MoffatTutor11y ago#3
Oops sorry - I was thinking of the main lecture on variance analysis. The actual profit is as follows: Sales: 5,035,000 Cost of sales: Materials 2,300,000 Labour 180,000 Variable o/h's 502,000 2,982,000 Less: cl inv (2,000 x 52) 104,000 (inventory is always valued at std cost) 2.878,000 Contribution 2,157,000 Fixed o/hs 935,000 Profit 1,222,000
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