ABC, SAE, SBV theory - query!

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:26AM in AAT student discussion
Does it matter how you display your answer in the exam?

ABC = Actual - Budget x AR = Capacity
SAE = Standard - Actual x AR = Efficiency
SBV = Standard - Budget x AR = Volume

Some answers for past papers seem to display the answer as:-

ABC = Budget - Actual x AR = Capacity
SAE = Actual - Standard x AR = Efficiency
SBV = Budget - Standard x AR = Volume

I realise you'll get the same answer, but will you get in trouble for writing it down in the opposite way to their answers, or will they ignore it?

Are some past papers doing this, or am I going mad and wasting revision time by waffling on here?

Oh, also, is there any easier way of remembering:-

Actual = Actual hours
Budget = Standard hours x budget hours
Standard = Standard hours x actual hours

Assuming these ARE right, please let me know ASAP if they aren't!

Thanks in advance

Bryan

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:ABC, SAE, SBV theory - query!

    Hi

    I think regardless of which way round you write the part in brackets it will still be marked correct so long as you get the same figure and state correctly whether this is adverse or favourable

    Hope this helps!!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:ABC, SAE, SBV theory - query!

    I seem to be OK with it now, I remember the whole ABC, SAE and SBV thing and the answers agree! :D

    As for Favourable/Adverse, what's the easiest way of remembering this?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:ABC, SAE, SBV theory - query!

    With the fixed overhead variances I couldn't get my head around adverse or favourable to start with as it is the opposite way round from material and labour variances.

    How I remember it now is with the FO efficiency variance - you want them to be efficient, so if it takes more hours this is adverse (the same as the material/hours ones really)

    With volume and capacity this is different - they need to take more hours to recover the fixed overheads as costs are being absorped by labour hour. So for capacity if the actual is less than budget this is actually adverse as not enough overheads have been recovered. Same goes for volume.

    Sorry its a bit long but I hope it makes sense?!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:ABC, SAE, SBV theory - query!

    I think it does. I'll be writing the ABC etc in the back of my paper for refernce anyhow. So if I amend it for this, will this be correct?

    Less hrs (A) ABC
    More hrs (A) SAE
    Less hrs (A) SBV

    All hrs meaning actual.

    ???
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:ABC, SAE, SBV theory - query!

    Yes that's right if the actual hours (or in volume actual based on standard) is the lesser of the two figures the answer will be adverse for volume and capacity, favourable for efficiency
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:ABC, SAE, SBV theory - query!

    That's another way at looking at it! :D

    Muchos cheers for the help!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:ABC, SAE, SBV theory - query!

    Oh, one more thing. Easiest way to remember (F) and (A) for the PURE method?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:ABC, SAE, SBV theory - query!

    the pure method?? oh price usage etc....

    that one is common sense really you want to spend least money possible. so less materials and less material usage is favourable.

    as is lower labour rate and labour hours
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:ABC, SAE, SBV theory - query!

    Good, that's the way I've been applying it!

    Thanks!

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