operating statements??

gingervicki
gingervicki Registered Posts: 87 💫 🐯 💫
hi im just at a bit of a stuck point
.....

i know what a reconcilliation from std cost to actual costs is but what is an operating statement or what does it have in it

thanks

vicki

Comments

  • GemmaLouise
    GemmaLouise Registered Posts: 56 💫 🐯 💫
    An operating statement is basically showing turnover, expenes and operating profit!
  • Londina
    Londina MAAT, AAT Licensed Accountant Posts: 814
    An operating statement is basically showing turnover, expenes and operating profit!

    not necessarily! I saw in some past papars the following request:

    "Prepare an operating statement reconciling the standard total cost for actual production with the actual total cost of actual production"
    This will assume that you have to prepare a operating statement with turnover, expenses and operating profit, instead it shows:

    TOTAL BUDGET COST per ACTUAL Units

    minus
    all the variances (material, labour, fixed overhead)
    total
    Actual cost for the actual units!

    I found this confusing, how do I know I should do this type of operating statement with variances and not the one with sales etc for the standard and actuals as seen in my text book so often?:confused1:
  • mally
    mally Registered Posts: 14 Regular contributor ⭐ 😼 ⭐
    An operating statement is exactly as Londina says.

    Its related to the topic variance analysis.

    A definition: Operating statements show how the combination of variances reconcile budgeted contribution with actual contribution.

    Mally
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