Pev exam paper june 2005

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zoeeileen
zoeeileen Registered Posts: 19 New contributor 🐸
HI HOPING SOMEONE CAN HELP ME.

ON THE EXAM PAPER ABOVE I GOT STUCK ON THE FIXED OVERHEAD VOLUME VARIANCE TASK 1.1 SECTION B iii AND I AM REALLY HOPE SOMEONE CAN EXPLAIN HOW THEY GOT THE ANSWER.

THANY FOR YOUR HELP ZOE

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  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034 mod
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    • Budgeted output for Model F was 10,000 and for Model H was 1,000
    • 9,800 Model F and 1,000 Model H stoves were produced
    Fixed Overheads absorbed per product
    • Model F 5 hours @ £6.00/hr
    • Model H 8 hours @ £6.00/hr

    So fixed overhead absorbed:
    9,800 x 5 hrs x £6 + 1,000 x 8 hrs x £6

    And budgeted overhead
    10,000 x 5 hrs x £6 + 1,000 x 8 hrs x £6

    The difference (absorbed less budgeted) represents the variance (positive being favourable as more was absorbedthan budgeted, negative adverse)
    Sandy
    sandy@sandyhood.com
    www.sandyhood.com
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