PEV Marginal Costing Rec. A bit out of the blue!

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:25AM in AAT student discussion
Hi!

I thought that paper was a blaze apart from that one marginal costing question. I am interested in seeing whether I got the right idea so feedback would be appreciated!

BTW I didnt use anything like contribution, over absorption, sales or unknown differences.

Here goes:

Std Variable cost: xxx

Variances:
Matterials Price xxx
Matterials Usage xxx
Labour Rate xxx
Labour Usage xxx

Total variable cost: xxx

Overheads xxx
TOTAL O/H variance xxx

Total actual cost: YYY

Reconcile-

Act matterials xxx
Act labour xxx
Act O/H xxx

Total actual cost: YYY



Was the main objective was that we lumped our 3 overheads variances together to some extent????? I think that my total overheards was around (£16000) but should I have split it into O/H price variance and another lump?????

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PEV Marginal Costing Rec. A bit out of the blue!

    You'll be fine :)

    Regards

    Dean
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PEV Marginal Costing Rec. A bit out of the blue!

    OMG! I read the question as the budgeted marginal cost should be reconciled with the actual marginal cost, so just took out all the fixed overhead variances - am i completely wrong?! We have never done a marginal costing variance reconcilliation and i hadn't picked it up in the book cos out tutor never uses them! And i thought i'd done so well...
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PEV Marginal Costing Rec. A bit out of the blue!


    No, your on the right track! The actual cost, think it was something like £419,000, was the same as marginal cost. It was just a case of splitting up the overheads correctly in the statement which is where I went wrong! Hopefully we will both pass because most people found this question confusing and we should have done OK in the rest of the section.

    Best of luck.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PEV Marginal Costing Rec. A bit out of the blue!

    You have done alright. There was no mention of sales turnover etc.

    The question wanted you to reconcil the standard costing using marginal and absorption mehtod. Both should have reconciled to £419,750 (actual costs)

    See my post on PEV Exam thread for the answer on marginal cost.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PEV Marginal Costing Rec. A bit out of the blue!


    Hi Petrol Monkey

    My reconcilliation is very similar to yours. The thing was I stupidly set my overheads figure using the standrd absoption cost and then put in the total OH variance. What I should have done was to put in the actual overheads and the price variance only. I did however mention in the next section that marginal costing is time based with no absorption and hence you do not use the O/H subvariances.

    Assuming that I got the rest of the section correct, can you give me your opinion as to whether you think this mistake will cause me to fail???

    Thanks

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PEV Marginal Costing Rec. A bit out of the blue!

    I was always told that if you got one part wrong then the examiners were only suppose to mark you down once, the rest of you answers to the question would be based on the reults that you showed.

    Sounds like you got your theory correct anyway.



Categories

Privacy Policy