# Help..... Financial performance Q

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Registered Posts: 283 Dedicated contributor 🦉
Hi,

On the aat paper for financial performance (the once you can print out).
On task 4, there is an operating statement and I can't for the life of me work it out :-(

Could someone help me and point me in the right direction?

Thanks
Level 2 - Passed 2011
Level 3 - Passed 2012
Level 4 - Passed 2014

Awaiting to start CIMA

## Comments

• Registered Posts: 58 Epic contributor 🐘
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Just had a look am not sure which one your looking at can you send a link to it and ill have a look x
• Registered Posts: 283 Dedicated contributor 🦉
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The Question is:

Budgeted Overheads are: £52,000
Budgeted Output is 2,600 units & 10,400 Labour Hours
Acutal Output is 2,800 units & 10,900 Labour Hours
Actual Overheads are: £46,500

Whats the Effeciency Variance?
Whats the Capacity Variance?

I have worked out... (I think) that the volume variance is £4,000

But can't work out the others...
Level 2 - Passed 2011
Level 3 - Passed 2012
Level 4 - Passed 2014

Awaiting to start CIMA
• Registered Posts: 75 Epic contributor 🐘
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Hi Sammy,

I would say the efficiency variance is £1500 Favourable and Capacity is £2500 Favourable.

Of course I'm still learning so I could very well be wrong

Efficiency worked on 10400 hrs/2600 units x 2800 Actual units = 11200hrs, take that from the actual hrs 10900 and leaves 300 difference x by Standard (52000/10400) = £1500.

Does that make sense.. haha
Fully AAT qualified July 2015
• Registered Posts: 75 Epic contributor 🐘
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With the Capacity I worked it out on:-

Standard Rate (5.00) x Actual hours (10900) = 54500 which is more than we actually paid, minus the budgeted O/H cost (52000) = 2500
Fully AAT qualified July 2015
• Registered Posts: 422
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Hi Sammy,

Efficiency variance is OAR(SHAT- AHT)

OAR = 52000/10400=5

SHAT= 10400/2600*2800=11200 You need to flex the standard hours with actual output

AHT = 10900

Then 5(11200-10900)= 1500 Favourable

Capacity Variance = OAR( AHT-SHT)

OAR = 5

AHT = 10900

SHT = 10400

Into the formula 5(10900-10400) =2500 Favourable

Yes you're right volume variance is 4000 :thumbup1:

Does this help?
AAT

Level 2 - 2010
Level 3 - 2011
Level 4 - 2013

ACCA

F4 - 2015
F5 - 2015
• Registered Posts: 283 Dedicated contributor 🦉
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Thanks to you both!! It makes perfect sence!!

Thank you! Just panicking that's all !!
Level 2 - Passed 2011
Level 3 - Passed 2012
Level 4 - Passed 2014

Awaiting to start CIMA
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