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- December 8, 2022 at 2:33 pm #673965
A product has a standard selling price of $80 per unit and a standard contribution of $18 per unit. In the last period the sales volume contribution variance was $3,600 adverse. The management accountant calculates that if the company had used standard absorption costing the sales volume profit variance would have been $2,000 adverse.

What is the standard absorption cost per unit?

December 8, 2022 at 4:57 pm #673975Please do not simply type out full questions and expect to be provided with a full answer. You must have an answer in the same book in which you found the question and so in future ask about whatever it is in the answer that you are not clear about and then I will explain!

Given that the standard contribution is $18, they must have sold 3,600/18 = 200 units less than budgeted.

Since the sales volume profit variance is $2,000, the standard profit per unit must be 2,000/200 = $10.

The standard selling price is $80, so the standard absorption cost must be 80 – 10 = $70.

Have you watched my free lectures on all of this? 🙂

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