Question on Variances

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jewels.p
jewels.p Registered Posts: 1,774 Beyond epic contributor 🧙‍♂️
How would you work out figures for:

Standard usage of material for the actual level of production achieved

Standard hours produced in the period

Standard hours in the budget

I cant even figure out how to do those calculations never mind the variances the calculations are to be used for!!!:confused:

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  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
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    Hi Jewels

    If you look at that excel sheet i sent all it is, is

    Standar Marterials / Budget units x Actual Units = Standard usage of material for the actual level of production achieved

    All this is doing is looking at how much you expected to use for actual units - then you will go on to how much material you actually used to get your variance
  • jewels.p
    jewels.p Registered Posts: 1,774 Beyond epic contributor 🧙‍♂️
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    I only printed off the second page of the Excel never noticed the first page!

    This is stressing me out it is so complicated. Think I might pack it in for the weekend. Been trying for the last few days but it aint sticking in my head.

    Thanks anyway Vic
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
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    Feel for you jewels take a break and go back once your relaxed even if need be go back to ECR books referesh yourself on that and it might go in a bit - but its not you almost everyone ive spoke to really struggled with this unit i know i did :)
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
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    or another way of looking at it is

    you expected to sell 100 units using 100kgs material but you produced 90 units instead so the sum would be

    Standar Marterials / Budget units x Actual Units = Standard usage of material for the actual level of production achieved

    100kgs /100 Units x 90 Units = 90 KGS (Standard usage of material for the actual level of production achieved)
  • umerali2003
    umerali2003 Registered Posts: 400 Dedicated contributor 🦉
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    Hello
    There are many ways to get your head around the variances . The basic one which i have used was to make a standard cost card for every variance question regardless if it is required in the question or not once u have made the standard cost card the rest of the question becomes easier . Try to understand what each and every variance means because examiner these days are more interested in asking how an adverse and favorable variance occurs rather then just giving you the calculation .
  • jewels.p
    jewels.p Registered Posts: 1,774 Beyond epic contributor 🧙‍♂️
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    A-Vic wrote: »
    or another way of looking at it is

    you expected to sell 100 units using 100kgs material but you produced 90 units instead so the sum would be

    Standar Marterials / Budget units x Actual Units = Standard usage of material for the actual level of production achieved

    100kgs /100 Units x 90 Units = 90 KGS (Standard usage of material for the actual level of production achieved)

    The amount per unit is 10 litres. The budgeted amount of drums is 5,000. The actual amount is 4,800 so is the answer 48,000? That is the answer I got to begin with but that seems too easy a calculation so I am thinking I am completely wrong?
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
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    looks perfectly correct to me all you need to do with this is calculate the 10 ltrs by actual units :)
  • Marga
    Marga Registered Posts: 981 Epic contributor 🐘
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    hang in there!!! i am getting my books this week! :)
  • jewels.p
    jewels.p Registered Posts: 1,774 Beyond epic contributor 🧙‍♂️
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    A-Vic wrote: »
    looks perfectly correct to me all you need to do with this is calculate the 10 ltrs by actual units :)

    Surely it is not that easy? Or maybe they are breaking me in gently! lol
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
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    jewels.p wrote: »
    Surely it is not that easy? Or maybe they are breaking me in gently! lol

    i think the difficult thing is mostly they bombard you with lots of info and its knowing which to pick out
  • jewels.p
    jewels.p Registered Posts: 1,774 Beyond epic contributor 🧙‍♂️
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    A-Vic wrote: »
    i think the difficult thing is mostly they bombard you with lots of info and its knowing which to pick out

    God no I didnt mean the whole variances thing is easy I mean the question I am doing cant be that easy!

    Can you confirm something Vic to calculate a Material Usage Variance it is:

    (Standard Quantity Usage - Actual Quantity Usage) x Standard Rate

    It has it the other way round in other notes I have been given. They say

    (ACTUAL Quantity Usage - STANDARD Quantity Usage) x Standard Rate?????
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
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    jewels.p wrote: »
    God no I didnt mean the whole variances thing is easy I mean the question I am doing cant be that easy!

    Can you confirm something Vic to calculate a Material Usage Variance it is:

    (Standard Quantity Usage - Actual Quantity Usage) x Standard Rate

    It has it the other way round in other notes I have been given. They say

    (ACTUAL Quantity Usage - STANDARD Quantity Usage) x Standard Rate?????

    I dont calculate it that way (but yes i think your right)

    But basically they are now asking you to do the full variance

    so how much you expected to use compaired with what you actually used

    10,000units should have used 10,000kgs

    But did use say 9,000kgs = 1000kgs Fav (because you used less)

    = x price per KGS (always show variance in £)

    Sorry i know woffled a lot but only way i can explane it broken down
  • jewels.p
    jewels.p Registered Posts: 1,774 Beyond epic contributor 🧙‍♂️
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    AAAAAAAAAAAGH! I hate these bloody things! Just spent the past couple of hours trying to get it but there seems to be so many ways to calculate it I have absolutely no idea what I am doing.........away home (giving up again) :sad:
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
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    Sorry :(

    You will get it - it took me months but you will i know it
  • jewels.p
    jewels.p Registered Posts: 1,774 Beyond epic contributor 🧙‍♂️
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    A-Vic wrote: »
    Sorry :(

    You will get it - it took me months but you will i know it

    You said that to me with DFS and you were right it did click eventually so I am trusting you with this one too!

    Thanks Vic (not Anne) lol
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