Financial Performance Help
Sammmy88
Registered Posts: 283 Dedicated contributor 🦉
I need urgent help!!
I have my re-take tomorrow, and the one thing i failed miserably on is on CBT 2: Tasks 1.2 and 1.3..
Please can someone help?
Thank you
I have my re-take tomorrow, and the one thing i failed miserably on is on CBT 2: Tasks 1.2 and 1.3..
Please can someone help?
Thank you
Level 2 - Passed 2011
Level 3 - Passed 2012
Level 4 - Passed 2014
Awaiting to start CIMA
Level 3 - Passed 2012
Level 4 - Passed 2014
Awaiting to start CIMA
0
Comments
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Hi Sammy, let's see if I can help on CBT 2 1.2 first of all:
Direct material usage
Take the actual amount of materials used (1,000) and price it at the standard rate (£9,000 / 1,000 litres = £9). This makes £9,000
Then, flex the budget to arrive at how much material we should have used. So, divide 1,000 litres by 200,000 then multiply by 190,000 (actual units) to arrive at 950 litres, and multiply by £9 (standard cost per litre). This makes £8,550
As the actual cost of material used was £450 more than budgeted, this makes it adverse
Direct material price
Actual price for actual material purchased is £8,500
Actual materials purchased (1,000 litres) x standard cost (£9) is £9,000
As the price we paid for materials is £500 less than budgeted, this is favourable
Direct labour rate
Actual price for actual labour is £5,760
Actual labour hours (360) at the standard rate (£15...flex the budget for this, so £6,000 / 400 hours) is £5,400
As the rate we paid for labour is £360 more than budget, this is adverse
Direct labour efficiency
Actual labour hours at standard rate (calculated above) is £5,400
Hours we should have incurred for labour (again, flex the budget so £6,000 / 200,000 units x 190,000 units) is £5,700
As the amount we paid for actual labour is £300 less than budgeted, this is favourable
Does that make any sense? I find that you have to keep practicing variances over and over again to get them.
I'll now have a look at task 1.3 for you.0 -
Task 1.3:
Fixed overhead capacity
First, we are told that production overheads are absorbed on a labour hour basis, so we use labour hours here (4,250)
Multiply 4,250 by the standard cost of fixed overheads (£104,125 / 4,250 hours = £24.50) = £104,125
Actual hours at standard cost is 4,200 hours x £24.50 = £102,900
As the actual overheads are £1,225 under the budgeted capacity, they are adverse
Fixed overhead expenditure
Budgeted overheads are £104,125
Actual overheads are £98,450
As our actual overheads are less than budgeted, the £5,675 difference is favourable
Fixed overhead efficiency
Actual hours at the standard rate is 4,200 hours x £24.50 = £102,900
Actual hours that should have been used for production - flex the budget. 4,250 hours / 17,000 units x 18,000 units = 4,500 hours. Multiply by the standard rate of £24,50 = £110,250
As the hours we used for production are less than budgeted, the £7,350 is favourable0 -
Oh, and Sammy, if this all appears like double Dutch, check out the Fixed Overhead Variances worksheet, which is available under My AAT > E-learning resources and Green Light Tests > Level 4 Diploma > Financial Performance, because this explains all of the fixed overhead variances.
Don't panic, and good luck for tomorrow0 -
Thank you so so much! Makes so much more sense!! :-)Level 2 - Passed 2011
Level 3 - Passed 2012
Level 4 - Passed 2014
Awaiting to start CIMA0 -
Morpheus-check your work
I think the last answer is £7350 favourable0 -
Oops! Transposition error. I did my workings though, so should still get 1 mark *wink*0
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