Registered Posts: 7
Hi, I am struggling to work out the total fixed overhead variance on 3B.

How do I do this?

• Registered Posts: 77
edited May 2017
Hey.

These questions are working backwards, the formula for Expenditure variance is:
Total standard fixed cost-total actul fixed cost=expenditure variance
You have worked out the the standard/budgeted fixed cost in part a as 16,000 already.
16,000-?=2,200 (this figure is given in the question already.
If you want to know the actual fixed overhead cost you re-arrange the formula to:
16,000+2,200=18,200 Sorry cant put a pound sign as my keyboard isnt working.

The total fixed overhead variance is not too difficult as well but I just canot remember right now (trying to prepare for my synoptic assessment) how to work it out. I will try to go through my notes and write back to you tomorrow if its not too late.

Many thanks.

• Registered Posts: 139
Total fixed overhead variance is split into expenditure & volume.

Expenditure you know is £18,200 which against a budgeted £16,000 is £2,200A.
Volume is budgeted units vs actual units - budgeted 12,800 actual 14,000 meaning you produced 1,200 more than budgeted which is favourable.
1,200F units x £1.25 = £1,500F.
£1,500F - £2,200A = £700A.

Hope this helps.
• Registered Posts: 25
Hi, I am struggling to work out the total fixed overhead capacity on 3B (c)

How do I do this?
• Registered Posts: 139
edited May 2017
Fixed overhead capacity is worked out by comparing the difference between actual hours worked vs budgeted hours worked.
2.5hrs/unit std, 12,800 units is 32,000 hrs budget.
Actual hours: 33600
Budget hours: 32000
1,600 hours favourable
xOAR/hr £0.50
£800F

The fixed overhead capacity variance focuses on how many hours were worked compared to budget, as hours worked was more than budget it is a favourable variance.
• Registered Posts: 25
• Registered Posts: 25
Thats fine. I got it about efficiency
• Registered Posts: 139
Overhead efficiency takes the standard (flexed) hours and compares them to actual.
Flexed hrs: 14,000 x 2.5hr = 35,000hrs.
Actual hrs: 33,600 hrs
Difference: 1,400F
x OAR/hr: £700F.

To remember fixed overhead effic/capac remember this:
Standard (aka flexed)
Actual
Actual
Budget (compare to the original budget, not flexed budget!)

SA = efficiency, AB = capacity

Fixed overhead expenditure is always £, fixed overhead volume is always units & fixed overhead efficiency/capacity is always in hours.
• Registered Posts: 25
Thanks. Can you help me with ques 4 Direct labour efficiency please?
• Registered Posts: 139
Unless I'm mistaken q4 is the marginal costing operating statement - are we still on sample 2? What are you struggling with?
• Registered Posts: 25
direct labour efficiency
• Registered Posts: 139
Efficiency is how long it took vs how long it should have taken.
Should have taken 0.5hr/unit x 3,200 so 1,600hrs
Actually took 1,920
320hrs A
x rate/hr (£15000/1500) £10.00
£3,200A
• Registered Posts: 25
Thanks a lot. I am really struggling. My exam is on 13th may. Thanks for your help.
• Registered Posts: 139
Let me know if I can help. Variance analysis is a common one people get wrong based on examiner reports and I think the best way to learn is to repeat repeat repeat.
• Registered Posts: 7
Thanks for your help! Just sat my D&C exam! Wow! Not enough time!
• Registered Posts: 139
Hope it went well!
• Registered Posts: 25
Hi Irrorate, Do you have any working paper which shows all the calculation for Assessment 1? Can you please email it to me?
• Registered Posts: 139
Hi Bushra

Unfortunately I do not, I just worked out the answers as you requested them.

If there's anything I can help with do let me know.

Kind regards
• Registered Posts: 25
Sorry to bother you Irrorate, Can you please help me with 9A,5A,3A and 1B from assessment 1.Thanks
• Registered Posts: 139
1B
Do a high-low between the given units to retrieve the variable cost. Plug that back in to get the fixed costs.
Then you need to heed the notice of fixed overheads increase £12,000 if units are greater than 30,000 and the variable costs reduce by £1.00 for units in excess of 25,000.

3A
"standard" means flexed. Flexed litres of fuel for 5,000 journeys. Work out budgeted (12,460L / 7,000J) £1.78L/journey x 5,000 so 8,900L for 5,000 journeys. You can work out hours by substituting litres for hours.
Fixed overhead volume variance we covered in post 3 in this thread. Budgeted 7,000 actual 5,000 variance 2,000A journeys OAR = (£140,000 / 7,000) = £20/journey

5A
3-month averages you need to do some revision on time series and seasonal variations. Basically you take 3 months, add them together and divide by 3 so (5,760 + 5,820 + 5,760) / 3 = 5,780. Do this moving down so (5,760 + 6,600 + 6,120) / 3 = 6,160.

9A
Q9 has been answered by both myself and @N4T here: https://forums.aat.org.uk/discussion/comment/450902#Comment_450902
https://forums.aat.org.uk/discussion/comment/453841/#Comment_453841

I'm conscious of just feeding the answers as you will need to run through the processes. Hopefully I've provided starting points for all questions.

Let me know if I can help any more.
• Registered Posts: 25
I have read bpp books but when I am looking at question, I know the calculation. But I am really getting mixed up with all formulas.
• Registered Posts: 25
Hi Irrorate, Assessment 2 task 4
opening inventory month 3
(10000-9000) * 95 =
Is it right ?
• Registered Posts: 25
That's fine. Didn't see its FIFO.
• Registered Posts: 25