FNPF Variance written question - Task 1.6

missm4ry4m Registered Posts: 177 Beyond epic contributor 🧙‍♂️
Hi people,

The variance question where they do not give you all the signs for the variances. How do you identify the signs without them providing a budget/actual table with the figures?

Thanks in advance


  • yummy
    yummy Registered Posts: 6 Regular contributor ⭐
    a little help from

    I am studying FNPF at the moment, and hope this help.

    Normally, if you have £xxxx adverse in material price variance, which means you have paid too much for your material than expected, but this may help improve the labour efficiency if these materials are high quality which can help reduce wastage and reduce the machine breakage and vice versa.

    An adverse in Material usage variance means more material has been used than planned. This could be caused by wastage or due to labour/machinery problems and vice versa.

    When you see the variance was favorable in labour rate variance, which means a lower rate was given than expected due to the pay rise not being given. However, this may affect the labour efficiency like demotivating staff in work and vice versa.

    Adverse in labour efficiency variance shows more hours have been used than planned. This could be the machinery problem, the absent of staff, or staff were demotivated due to not receiving the pay rise and vice versa.

    An favorable fixed overhead variance indicates actual cost were lower than expected, this could be
    more production produced than planned with a new machine or less wastage etc and vice versa.

    Fixed overhead volume variance if it was adverse, which means the actual volume was less than expected. This may caused by lazy staff or not enough staff during this period. Or machine has problem and has slow down the production so that the actual production is lower than the budgeted production.

    Also welcome more opinions.
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