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variances

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › variances

  • This topic has 1 reply, 2 voices, and was last updated 9 years ago by John Moffat.
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  • Author
    Posts
  • December 31, 2015 at 10:46 am #293088
    farekhan
    Participant
    • Topics: 12
    • Replies: 6
    • ☆

    A company operates a standard marginal costing system.last month its actual overhead expenditure was 10% above budget resulting in a fixed expenditure variance of $36000

    Ans

    expenditure variance 36000
    =10% of budgeted expenditure
    therefore budgeted expenditure 360000
    actual expenditure variance 36000/10x 110
    396000

    sir could u please explain me how have they solved the question?

    December 31, 2015 at 2:25 pm #293098
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54664
    • ☆☆☆☆☆

    For every 100 budget, the actual must be 10 higher and be therefore 110.

    Or, putting it the other way round, for every 10 variance, then actual must be 110.

    Therefore, for a variance of 36,000, the actual must be (110/10) x 36,000 = 396,000

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