PEV Exam Volume variance

Bodie
Bodie Registered Posts: 3 New contributor 🐸
in AAT Level 4 (Level 8 in Scotland)
Could anyone help me with a little query I have please?

I am looking at PEV Dec 06 Task 1.1 b vi). The way I would normally work out the volume variance is budgeted hours minus standard hours x standard rate but the answer given uses units rather than hours. Can anybody explain?

Thanks :confused1:

Comments

  • definite.studies
    definite.studies Registered Posts: 88 Regular contributor ⭐
    This is because there are 2 ways of measuring volume, either using standard hours for the actual output or using the number of output units produced. Either can be used to calculate the volume variance.

    If you are working in standard hours then you use the fixed O/H absorption rate per standard hour.

    If you are working in units, you use the fixed O/H absorption rate per unit.

    Having worked out the FOAR per std hour earlier in the task but not per unit, the answers could be criticised for inconsistency. Personally I like working in units as they feel more real to me than standard hours, which I think are rather ficticious.
  • Bodie
    Bodie Registered Posts: 3 New contributor 🐸
    Many thanks :thumbup:
  • joyride
    joyride Registered Posts: 62 Regular contributor ⭐
    Worried about PEV

    I hope I don't mess up.
  • Bodie
    Bodie Registered Posts: 3 New contributor 🐸
    Yeh, there is a good chance of that.

    I mean me, not you.

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