PEV Dec 2008

Good Morning

Hope the studies are going well to all who have exams next week.

I am working through the above paper, and I have a discrepancy in one of my answers, and I wondered if someone would be so kind as to explain what/why I am wrong.

It is Task 1.1 (b) (ii) - Direct Material (glass) usage Variance

I have taken the standard material usage of 10,000 less the actual material usage of 10,500 and multiplied by the standard usage which was 5kg, given me 2500 adverse.

The answer has taken actual production of 2100 multiplied by standard usage of 5kg less actual kgs of 10,500 , given a nil variation.

Now I am get a bit googly eyed doing papers, but why are they comparing actual with actual, or have I just missed the point????

Any help as always is gratefully received.




  • oh confused one
    oh confused one Registered Posts: 128 πŸŽ† 🐘 πŸŽ†
    I was doing this paper last night and struggled with a couple of points but actually got this bit right.

    THe way I work out usage is (STD usage for ACTUAL production - actual prod) x Std price

    This gives you (10,500 -10,500) therefore no variance.
    to work out std use for actual prod I did the following:- 10,000/2000 = 5 x 2100 = 10500

    Standard usage is 10,000 / std amount made 2000 which gives you a standard use of 500 kgs per panel. You ACTUALLY made 2100 panels so multiply that by the 500 kgs worked before and it gives you 10,500.

    Hope that is clear - when I look at the answers they work things out differently from me but I get the same answers
  • columbia
    columbia Registered Posts: 580
    Thanks for the quick reply.

    I can see exactly how you are working it and I agree with how you get a nil variance. However the way I have been understanding the formula and applying it to previous papers seems to work so far, with the exception of this paper.

    I have taken standard production of 10,000 x standard unit price of 5, and taken it away from actual production of 10,500 x standard unit price of 5, which shows an adverse variance of 2500.

    Don't get me wrong, you make perfect sense with your workings, I am just a little bit concerned that being so close to the exam it would seem that I need to re-learn a formula that I have previously thought was correct.

    Think it's time for a coffee and a relax for a few minutes as I expect I am just not seeing the picture clearly at the moment!

    I assume you are taking next weeks exam, so the best of luck to you :-)

  • oh confused one
    oh confused one Registered Posts: 128 πŸŽ† 🐘 πŸŽ†
    we were given a sheet of variance formulas last year that I haven't seen written anywhere else. Our tutor was to say the least a little quirky, he also gave us the standard way of working things out and said to use what we felt most comfortable with - I went with his sheet and whilst I failed on just the variances last year I know why - it was the first exam in a week of them and I went completely to pieces, I however feel much better this yeat and well ready for it - so come on Monday bring it on lol
  • columbia
    columbia Registered Posts: 580

    I think I will just go with what I have learnt, so long as I show my workings they will at least see where I am getting my figures from.

    I too have been taught some quirky ways including learning something called "cross chickens"......

    All the best, I am not going to dwell on it anymore, if it had been a proper exam my answer would have still been what I believed it should be and I would have answered subsequent questions using that data.

    Thanks and good luck!

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