MAC: Reconciliation Statement for Variances how best to write

pirate

Hi there

Is there a recommended andcorrect way to write a reconcilliation statement for variances in the exam.

In the osbourne book it shows a reconciliation statement as beginning with
Standard Costs for the Actual level of production
then Adding adverse costs and subtracting Favourable costs to
arrive at the actual production cost
eg
We have the following variances
DM PV = 1520 A
DM UV = 750 F
DL RV = 550 F
DL EV = 1050 A

From the Osbourne book we would write
Std cost of Production £72900
Add Adverse DMPV 1520
Less Favourable DMUV (750)
Less Favourable DLRV (550)
Add Adverse DLEV 1050
= Actual Cost of Production 74170


Can you do this the other way round so that we start
Actual Cost of Production 74170
less Adverse DMPV (1520)
Add Favourable DMUV 750
Add Favourable DLRV 550
Less Adverse DLEV (1050)
= Std Cost of Production 72900

Thanks

K

jewels.p

I dont understand why you would want to write it the other way round?

As you are starting with the Standard Cost before you have the Actual Cost.

Or am I not getting what you are asking?

A-Vic

I agree jewels i start with

standard cost for actual prdouction - you do it that way as your reconciling to find out where the budget went wrong or needs changing

We have the following variances
DM PV = 1520 A
DM UV = 750 F
DL RV = 550 F
DL EV = 1050 A

From the Osbourne book we would write
Std cost of Production £72900
Add Adverse DMPV 1520
Less Favourable DMUV (750)
Less Favourable DLRV (550)
Add Adverse DLEV 1050
= Actual Cost of Production 74170

pirate

Hey Jewels and A-vic

was only be becuase and adverse is a negative figure but you add it bad and a favourable is a postive figure but you take it off.
just trying to make it easier for myself
lol

A-Vic

pirate wrote: »

Hey Jewels and A-vic

was only be becuase and adverse is a negative figure but you add it bad and a favourable is a postive figure but you take it off.
just trying to make it easier for myself
lol

the way i do it is list in one adverse then next to it the favorable as attached dont know if it will help

pirate

A vic

many thanks that looks a lot better layout

Karen

A-Vic

Re-done with figures

SandyHood

A clear layout, the sort I use.