A company uses standard marginal costing. Its budgeted contribution for the last month was $20,000. The
actual contribution for the month was $15,000, and the following variances have been calculated:
Sales volume contribution variance $5,000 adverse
Sales price variance $9,000 favourable
Fixed overhead expenditure variance $3,000 favourable
What was the total variable cost variance?
A $9,000 adverse
B $9,000 favourable
C $12,000 adverse
D $12,000 favourable
the answer is A....... i didnt get how it is solved
Ask the Tutor ACCA MA
variances
Budgeted contribution $20000
Sales volume contribution variance $5000(A)
Standard contribution from actual sales $15000
Variance
Sales price variance $9000(F)
Total variable cost variance $9000(A)
Actual contribution $15000
You have to subtract $5000 of sales volume contribution variance from the budgeted contribution since it is adverse and then you get a standard contribution from actual sales of $15000. Thereafter you add $9000 of sales price variance since it is favourable and then you have to find the missing figure to get actual contribution of $15000, which is an adverse of $9000. Ignore Fixed overhead expenditure variance ($3,000 favourable) since it not part of marginal costing :D hope u understood
yeah, i did thankyou :)
10y ago#3Shazzy: Thank you for your answer, but please do not answer in this forum - it is the Ask the Tutor Forum, and you are not the tutor. (But please do answer in the other F2 forum).
Oh Im so sorry sir.. I really had no idea...wont happen again :D
10y ago#5No problem :-)
10y ago#6It is not the correct answer because 200 is the number of hours, and variances are always stated in $'s !!
You need to multiply by the standard cost per hour.
I do suggest that you watch our free lectures. They are a complete course for Paper F2 and cover everything needed to be able to pass the exam well.
10y ago#7You are welcome :-)
Sign into reply to this topic.