Volume variance coming out adv when it should be fav ???

katiekitkat123

If some one could help me out on this that would be great,

I am working on some volume variance questions using the formula (Total Standard Hours - Total Budgeted Hours) X OAR, the questions where I have the hours worked work out fine, However when I haven't been given the Total hours I am using the Total units, I get the right figure but the calculator will say - when it should be favorable.

Here are the question I am working on,

A business has budgeted to produce and sell 5,000 units of its single product. The standard cost per unit is as follows:
Direct materials £12
Direct labour £10
Fixed production overhead £6

During the period they actually produced and sold 5,200 units and fixed production overheads cost £32,000.

The fixed overhead volume variance is £ .

OAR = £6

5000-5200x6 = -1200 (it should be 1200F)

I have this question and I get the same thing

A business has budgeted to produce and sell 100,000 units of its single product. The standard fixed production cost per unit is £1.10. During the last period its actual production and sales output was 110,000 units and actual fixed production overheads were £125,000. Which of the following is the volume variance?

OAR=£1.10
100000-110000x1.1= -11,000 (when it should be 11000F)

Could some one explain what I am doing wrong, Thanks

Katie

aaron0121

Hi Katie,

You're getting the correct figures however its just you're mixing up the actual output and budgeted output.

So for the first question overhead volume variance= OAR(AOUT-BOUT)
It's 6( aout=5200 and bout=5000) this gives the answer of 1200 fav.

This applies for the second question as well.
It's 1.10(110,000-100,000) = 11000F

Hope this helps Katie :001_smile:

I'm sure i read from a previous post that this is your last exam, so is there a date yet for your FP
exam.

katiekitkat123

My exam was set for Tuesday the 3rd July, but I refused to take the exam as I didn't feel the college had given the time or input needed for the exam, They re-booked my exam for tomorrow, I was given 40 minutes of input on Monday which I still feel wasn't enough and I have been reading through the kaplan book all week and doing all the practice tests and green light but I still don't feel ready but I do feel I know a lot more than last week, at least I can do all my variances now and understand them thanks to everyone's help on the forum

aaron0121

Good luck for tomorrow

If you have any more questions you're stuck on, quickly post them up on the forums before your exam
tomorrow :001_smile:

katiekitkat123

Will do, Thank you for all your help and good luck on your PTX Exam

aaron0121

lol my college messed up!!!!!!

I may not even be able to sit the PTX exam because my college don't see the point in opening up the building
just for one course. So what my college has said is there will be no lessons for PTX, however the college will
be open on the 26th July to sit the PTX exam.
So if i am going to do PTX, i have to self study which basically means going through osborne books,
and the cbt exams by myself. If there is enough students who are willing to sit the exam for the 26th of July then
I can take the exam, however if there isn't i will have to wait until september arggggggggg or pay kaplan
the £50 fee to sit the exam, then hopefully get reimbursed from the college :thumbup1:

katiekitkat123

I took my FNP exam, I don't know how I did but I know my written section was poor but only because my mind went blank and I could link my variances, now I'm sitting here its all come back but it a bit late now lol

Thank you to everyone on the forum that has helped me with all my questions

@ Aaron0121 I don't know if its just west midlands college then, but yours sounds just as clueless as mine. I went in today and the college is closed so there are only a few people there and they had forgotten they had book me in for the exam, I had to ring them to tell them I was outside the exam room waiting. Hopefully they get your PTX sorted out.

aaron0121

check your inbox katie, i have messaged you :001_smile:

katiekitkat123

Been so busy, have message you back now

aaron0121

Katie i have messaged you back!!!!!!