PEV help

warrants

Can anyone please give me some help on how to remember the formulas for PEV. :blushing: I can do the second part of the paper quite easily now. Its just on the first task I am being thrown by

Material Price Variances
Material Usage Variances
Labour Rate Variances
Labour Efficiency Variances
Fixed Overhead Volume Variances
Fixed overhead Capacity Variances
Fixed Overhead Efficiency Variances

If anyone could give me away to remember the formulas in a simple way, i'd be extremely grateful.:thumbup1:

thanks

rjww85

PEV help

I'm not sure I can help you remeber the formulas but this may help;

Material Price Variances- You are looking at the difference in cost of material, i.e the actual costs compared with the standard cost for actual production.

Material Usage Variances- You are looking at the varience in the useage of material, i.e the standard cost of the actual material purchased compared with the standard useage of material required for actual units produced.

Labour Rate Variances- As with the Materials Price Varience you are looking at the actual labour cost of actual production compared with the standard labour cost for actual production.

Labour Efficiency Variances- You need to think about how long it actually took to produce the units at standard labour cost, compared to how long the standard time for producing the actual units at a standard cost took, i.e how long did it actually take to proudce the units compared with how long it actually should have taken.

Fixed Overhead Volume Variances- There are two formulas for this, the first is calculated if you are working it out on an absorbtion rate based on hours taken

this is how long it should have taken (standard hours) at the the absorbtion rate, compared with the budgeted time at the absorbtion rate

the second way is calculated using units produced- actual output at the absorption rate per unit compared with budgeted output at the absorption rate per unit

The nex two can only be calculated if you are working out the variences using the labour hours at absorption rate

Fixed overhead Capacity Variances- looks at actual hours taken at the absorption rate per hour compared to the budgeted hours at the absorption rate.


Fixed Overhead Efficiency Variances- think back to the labour efficiency varience here, this looks at how long it actually took at the absorption rate per unit compared with the standard hours for actual production at the absorption rate.

Hope this helps you a little bit, its taken me long enough to learn them! And don't worry as you have plenty of time to learn them before the exam.:thumbup1:

Good luck!

warrants

Thanks alot for that :thumbup1:

I'm going to try and drill them into my mind - my exam is Monday at 9am :crying:

Im going to be a hermit all weekend.

Elena

Hi there,

I have a format for the workings if that is any use. Let me have your email and I'll send it over. It makes remembering the variances order easier.

Zoe

rjww85

I know what you mean I'm sitting the same exam!!:crying: But once you have learnt them they just come second nature!

Try practicing lots of the section 1 from the past papers which you can download from the AAT website.

warrants

Elena wrote: »

Hi there,

I have a format for the workings if that is any use. Let me have your email and I'll send it over. It makes remembering the variances order easier.

Zoe

Zoe,

Please do

its pushthebeat@yahoo.co.uk

Thanks in advance,

Dan :thumbup1:

warrants

rjww85 wrote: »

I know what you mean I'm sitting the same exam!!:crying: But once you have learnt them they just come second nature!

Try practicing lots of the section 1 from the past papers which you can download from the AAT website.

Its my second attempt, I was passed section 2 last time and dont find it too much of a problem now - its just getting those formulas in my head. I've got about 4/5 past papers to work through tomorrow, Sat and Sunday so hopefully those + your advice can get it to sink in

thanks again

phunkyphantom22

Why has this been moved to foundation when it is technician?

tallrodney

The easiest way to do these questions is to prepare a table see the example below:

Budget Adjusted Actual Variance
Quanity 1000 1200 1200
Material 1000 1200 1400 200 (a)
Labour 6000 7200 6900 300 (f)
Fixed Overheads
Total

The budget and actual figures come from the question all you need to do is complete the adjusted column this figures for this are the expected costs at the actual activity level.

The diffference between the adjusted and actual is the variance when you have calculated the two material and labour variances they should agree to the the total in the variance column as should you labour ones.