# FinPerf

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Registered Posts: 896 Epic contributor 🐘
Does anyone EVER use any of the variances in the actual real world!? I don't see myself using any of them and I don't know anyone who does.. what is the point! They are just rubbish! Fixed overhead capacity variance?! No!

Ok,
done.

On the greenlight thingy.. Q2.. is this wrong?

I want to put £20 adverse but I think they have got £60 adverse as the correct answer..? anybody know?

Ta B x

• Registered Posts: 2,525 Beyond epic contributor 🧙‍♂️
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Hello Becca

Still studying this unit so won't say too much just yet!

Re greenlight... can you get the whole question as it does say that you are given different questions each time you attempt it... so my question 2 may be different to yours.... also which of the three tests were you doing?

JC
~ An investment in knowledge always pays the best interest ~
Benjamin Franklin
• Registered Posts: 896 Epic contributor 🐘
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Sorry Jo, I didn't realise they were different each time..

Calculation of materials and labour variance

Question 2 of 10

Select one response based on the situation below.

A company uses 400 metres of material at a cost of £4,640, making 1,900 units. The budgeted production level was 2,200 units using 440 metres at a cost of £5,170. The total material usage variance is:

£470 favourable

£60 favourable

£175 favourable

Prob just being extra stupid.. I did fail after all!

B x
• Registered Posts: 2,525 Beyond epic contributor 🧙‍♂️
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Hey Becca

Don't be too hard on yourself!

I'll have a look at the question later and see if I can work it out....

I'll text you if I can and also share on here.

Be in touch later tonight or tomorrow.

JC
~ An investment in knowledge always pays the best interest ~
Benjamin Franklin
• Registered Posts: 896 Epic contributor 🐘
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Thanks Jo you're a star.

B x
• Registered Posts: 591 Epic contributor 🐘
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First Calculate Standard Cost from the budgeted figures = 570/440 = £ 11.75 per metre

Next Calculate Standard Usage from the budgeted figures = 440/2200 = 0.2 meters per unit

Material Variance = Standard Use * Standard Cost - Actual Use * Standard Cost

(1900 * 0.2) * £11.75 - 400 * £11.75

4465 - 4700 = 235 A

Thats what I make it anyway ? I'm confused now - can't see what I am missing !
• Registered Posts: 2,525 Beyond epic contributor 🧙‍♂️
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Hello uknitty

I spoke wih Becca earlier regarding the question as I am still studying this unit. I had worked out the standard costs etc. but had not quite got to the final answer.

~ An investment in knowledge always pays the best interest ~
Benjamin Franklin
• Registered Posts: 591 Epic contributor 🐘
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But I thought AAT greenlight was saying the answer is £60 A *boggle*
• Registered Posts: 2,525 Beyond epic contributor 🧙‍♂️
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BeccaLouJ9 wrote: »
On the greenlight thingy.. Q2.. is this wrong?

I want to put £20 adverse but I think they have got £60 adverse as the correct answer..? anybody know?

Ta B x

I explained that greenlight shows you the correct answer (if you get the question wrong) and the way the answer is calculated.

AATs explanation of the correct answer is... Standard cost of material is £11.75 (= £5,170 / 440 metres). Actual production of 1,900 units should use 380 metres of material (= 440 metres x 1,900 units / 2,200 units) but actually used 400 metres, an adverse variance of 20 metres. The total material usage variance is £235 adverse (= 20 labour hours x £11.75).

We think there is a typo where is says 20 labour hours.

Hope you hear back about your project soon so you can meet your March deadline. Out of interest, why do you need to know by March/what are you hoping to go on to do?

JC
~ An investment in knowledge always pays the best interest ~
Benjamin Franklin
• Registered Posts: 591 Epic contributor 🐘
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Long story short - I want to start the Professional Accounting Degree course at Manchester Met in September.

To do that I need to have also finished CFAB - and the AAT/ACA top up paper can only be sat in June or Dec - so I have to make the June sitting to be in with a shot. You can't apply to sit that paper unless you have finished AAT and had the results back.

I also have to try and squeeze in the CFAB law paper between March and June. So- y'know, no pressure (and just for giggles I am sitting two IAB payroll exams in February as well)
• Registered Posts: 2,525 Beyond epic contributor 🧙‍♂️
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Wow!!! Good luck with all that.

I studied payroll a couple of years back with IPP, now CIPP so if you have any questions drop me an email!
~ An investment in knowledge always pays the best interest ~
Benjamin Franklin
• Registered, Moderator Posts: 2,034 mod
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BeccaLouJ9 wrote: »
Does anyone EVER use any of the variances in the actual real world!? I don't see myself using any of them and I don't know anyone who does.. what is the point! They are just rubbish! Fixed overhead capacity variance?! No!

Well not now that I work full-time at Chichester College
But before that Yes

In fact I got a nice job in 1983 in Chicago (before many students were born!) on the back of the variance work I had done in London, and the fact that the firm couldn't find a suitable US accountant with the necessary skills.

It is up to you how you approach this area.

About 14 years ago, I attended a lecturers meeting at the BMA with the then chief assessor (a man called John Watts) for a fore runner of FNPF. I was shocked when he asked how many of us had worked in standard costing environments prior to working for colleges. Three of us put our hands up. He then told us that he'd never had that many before! There were 25-30 lecturers in the room.

I still do little bits of work, and I still come across variances in business.

BeccaLouJ9 this subject area had stood me well for years. My background gives me bags of examples. But you can come up with examples from your domestic life.

If you make a cake for 8 people, how much should you input: eggs, flour, sugar, butter, your time etc etc?
How much did you use?

Would your work value you more if you could apply that knowledge and help them through this recession?
Sandy
sandy@sandyhood.com
www.sandyhood.com
• Registered Posts: 472 Dedicated contributor 🦉
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Jo Clark wrote: »

I explained that greenlight shows you the correct answer (if you get the question wrong) and the way the answer is calculated.

AATs explanation of the correct answer is... Standard cost of material is £11.75 (= £5,170 / 440 metres). Actual production of 1,900 units should use 380 metres of material (= 440 metres x 1,900 units / 2,200 units) but actually used 400 metres, an adverse variance of 20 metres. The total material usage variance is £235 adverse (= 20 labour hours x £11.75).

We think there is a typo where is says 20 labour hours.

Hope you hear back about your project soon so you can meet your March deadline. Out of interest, why do you need to know by March/what are you hoping to go on to do?

JC

Hi,

We fed back this query regarding Green Light and it appears there was indeed a typo.

"The total material usage variance is £235 adverse. (= 20 labour hours x £11.75)."

has now been changed to:

"The total material usage variance is £235 adverse (= 20 metres x £11.75)."

This update is now live on the Greenlight site.

Thanks for flagging this up!

Stuart
• Registered Posts: 896 Epic contributor 🐘
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SandyHood wrote: »
I still do little bits of work, and I still come across variances in business.

BeccaLouJ9 this subject area had stood me well for years. My background gives me bags of examples. But you can come up with examples from your domestic life.

If you make a cake for 8 people, how much should you input: eggs, flour, sugar, butter, your time etc etc?
How much did you use?

Would your work value you more if you could apply that knowledge and help them through this recession?

No I work in an accountancy practice and I don't see myself ever using this skill, I am where I want to be and hopefully I won't have to move any time soon! I like what I do and if I were ever to change places of employment I would want to do exactly what I do now, so I don't see myself needing this knowledge at all!

I understand that people in certain jobs will use this, but just not me!

B x
• Registered Posts: 54 Epic contributor 🐘
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Hi,

Please could anyone help with the below question

The budgeted activity and actual results for the month of November 2008 are as follows:

Budget Actual
Production units
(solar panels) 2000 2100
Direct materials (paint) 1000 litres £25000 1,150 litres £29900
Direct material (glass) 10000 kilograms £120000 10500 kilograms £147000
Direct labour 4000 hours £28000 4000 hours £28000
Total cost £293000 £334900

(a) Calculate the following variances, if any, for November:

Variance
£ A/F
(i) Direct material (glass) usage variance 0
(ii) Direct labour rate variance 0
(iii) Direct labour efficiency variance 1400 F

COuld anyone tell me if the above answers are correct.

Thanks.