operating statements??

gingervicki

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

GemmaLouise

An operating statement is basically showing turnover, expenes and operating profit!

Londina

GemmaLouise wrote: »

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

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