• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

New! BPP Books for ACCA September 2022 Exams are now available, get your discount code >>

Variances

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Variances

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • June 10, 2021 at 10:28 am #624407
    xyzc
    • Topics: 247
    • Replies: 59
    • ☆☆☆

    Question: In a subsequent 4-week period, the business’ actual fixed costs were 3500. There were 18000 units produced. The budgeted fixed costs was 3000 based on budgeted production of 17500 units.
    Select two boxes to indicate the fixed production overhead total variance and whether it is favourable or adverse.

    I calculated the answer to be 500 adverse by comparing the orginal budget figure with the actual fixed costs figure. I don’t understand where I went wrong. How is the fixed production overhead total variance calculated and what is the formula for it.

    Also, which variance is calculated by comparting the original budget figure for fixed total overheads with the actual figure for fixed total overheads?

    June 10, 2021 at 4:59 pm #624455
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49583
    • ☆☆☆☆☆

    If the company was using marginal costing then the total variance would indeed be 500 adverse.

    However, if they were using absorption costing (which I guess is the case here), then the total variance is the difference between the actual fixed overheads ($3,500) and the flexed fixed overheads (actual production of 18,000 multiplied by the standard absorption rate of 3,000/17,500 per unit).

    I do explain all of this in my free lectures on basic variance analysis. The lectures are a complete free course for Paper PM and cover everything needed to be able to pass the exam well.

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate

If you have benefited from OpenTuition please donate.

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • Alistair02 on MA Chapter 1 Questions Accounting for Management
  • AymanR7 on Practice Question Klopp
  • Kyle on Translation of the subsidiary – ACCA (SBR) lectures
  • John Moffat on Discounting, Annuities, Perpetuities – ACCA Management Accounting (MA)
  • Joanne94 on Discounting, Annuities, Perpetuities – ACCA Management Accounting (MA)

Copyright © 2022 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy