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Volume variance

Forums › ACCA Forums › ACCA MA Management Accounting Forums › Volume variance

  • This topic has 1 reply, 2 voices, and was last updated 10 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • December 20, 2015 at 3:50 pm #292275
    Durdana
    Member
    • Topics: 12
    • Replies: 7
    • ☆

    Misty Co’s budgetary control report for last month is as follows:

    Fixed budget – 126,100 $
    Flexed budget -130,855 $
    Actual results – 133,580 $

    What was the volume variance for last month?
    A $4,755 (A)
    B $2,725 (A)
    C $4,755 (F)
    D $2,725 (F)

    Explanation: The volume variance for last month was $4,755 Adverse
    The volume variance is the increase in cost resulting from a change in the volume of activity, ie the difference between the original budget and the flexed budget.
    Volume variance = $126,100 – $130,855= $4,755 (A)

    Why answer is A?

    I think answer is C. Because when the volume of output is increasing it is favourable factor rather than adverse.

    Thank you in advance for your help.

    December 21, 2015 at 8:17 am #292313
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54831
    • ☆☆☆☆☆

    In future, if you wish for me to answer then please ask in the Ask the Tutor Forum – this forum is for students to help each other.

    The volume variance is indeed favourable, and it seems that your book has made a mistake.

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