PCR Dec 2007

Terdoo

Task 2.1 c
I am getting confused why on the flexed budget Maintenance variance of 93 adverse is not included, if included, it should have being 490 instead it is 397, would anyone explain why?

Thanks in advanced

Terdoo

Re PCR

Still waiting for the reply, is anyone writing PCR next week? it looks like am the only person writing it?

EAP

I have 894 on the flexed budget and 987 on the actual for maintenance costs - so not sure what you mean?

EAP

Hmmm... interesting

Oh no, I get it- they split it into contribution and fixed costs, included the maintenance in the contribution bit but then didn't include it in the contribution calculation. You're right - very odd! I reckon it's just an error.
Interesting point though - If maintenance is a stepped cost - does it count towards contribution or does it count as fixed?
I would say it counts towards contribution as it does change with output - does anyone else agree or disagree?

Terdoo

Re PCR

Thanks for the quick reply, but were they supposed to include the 93 for the total variances? because I am confused with that.

Rinske

Yep they should have done.

If you add up the other two columns separately and deduct one from the other, you see that the actual difference is not the 397 but the 490.

As for the stepped cost, I would let it depend on how big the steps are, but in general put them in the variable costs, so count them towards the contribution.

EAP

Not sure I know what you mean
they did include the 93A - just in the wrong place. They got the variance on the contribution as 1897A and then added 5A-50F+93A to get the total variance of 1945A. In other words, they included the figures in the contribution section, but the calculation in the fixed costs section. The total variances figure is correct.
Does this answer your question?