# december 2006 pev paper

Registered Posts: 121 🎆 🐘 🎆
hey every one. i was doing the paper but i got stuck.
but in this case here ,as you can see
1790 is not equal to 4200 (F)+2000(F)
where am i going wrong.pleeeease help. thanks in advance

• Registered Posts: 31 💫 🐯 💫
This might help -

Total Fixed O/H Capacity Variance + Total Fixed O/H Efficiency Variance = Total Fixed O/H Volume Variance.

I think you are using the wrong equation.

Tracy
• Registered, Moderator Posts: 2,034
Wolfe

What an excellent question.

There are different ways of absorbing overheads.
1. In intermediate ECR you look at absorption costing based on hours worked.
2. In technician PEV you look at standard absorption costing based on standard hours produced.

Here the actual hours worked were: 27,930
But as we are in a standard costing environment we do not use these hours for the overheads absorbed.
Instead we use 29,400 standard hours based on 117,600 units produced each being equivalent to 0.25 standard hours.

So the over-absorption is £6,200 (which is equal to the expenditure variance plus the volume variance)

At one time the model answer had the wrong answer to 1.1 a vi, this should be £88,200 (in case it is still wrong)
Sandy
[email protected]
www.sandyhood.com
• Registered Posts: 121 🎆 🐘 🎆
thank you Sandy hood

hi. thanks a billion Sandy hood. the puzzle solved atlast. thanks again.