AAT MOCK CBT 2 - task 2a & b (need help Please!)

mahadabdullah17

PeterC

1.2a
Material usage
They should have used 250 units x 3kg/unit = 750kg
They used 960 kg
This is 210kg too much (adverse)

Standard cost per kg is £36/3kg = £12/kg

The value of the excess material is £12/kg x 210kg = £2,520
This is the material usage variance

See also
https://youtube.com/watch?v=tBHSHzQyZZ0

Krisso

Not to question a registered tutor peter but I dont think your calculations are correct?

For example should it not be budgeted kgs 3kg x actual units 300 = 900kg - acutal usage 960 so adverse kgs = 60 x bugeted cost per kg £12 = Adverse usage of £720?

If I am wrong then I have messed up my entire exam

Krisso

I find putting my calculations (if I am right) in tables and working it out in this format helped me a lot

PeterC

Sorry! I need to be more careful, just like I keep telling people. Your method reduces the chance of this happening.

Krisso

As for B

Fixed overhead expenditure is an easy calculation it is basically budgeted overheads (£16000) less actual overheads (£18200) so your answer would be adverse

Volume variance is the one that always seems to trip me up as you need to work out the fixed overhead absorbtion rate which is easy as it is just budgeted overheads / budgeted units which should give you £1.25. Now this is where someone may correct me but I would then multiply actual units 14000 x £1.25 to give you the volume total and then (as I say this is the one I am unsure of) I think the calc us budgeted overheads less our calculation which again should give an adverse variance.

Krisso

PeterC said:

Sorry! I need to be more careful, just like I keep telling people. Your method reduces the chance of this happening.

Thank god for that, I wont lie I started to panic

mahadabdullah17

Thanks @Krisso and @PeterC .

For Part A - i can see the excel format but not sure of the calculations you did. Could you describe in writing please?

For Part B - still struggling with the volume variance? ( answer is £1500 favourable)

Krisso, did you sit this exam recently. If yes how did it go?

Krisso

For part A multiple the highlighted I have given you the totals and the results will be based off actual costs. For part b reverse the Calc I did and you will get a favourable result.

I found the exam ok as most of the calculations I’m ok with. The written part not so sure as I am not sure I put the detail in required for a high result.

mahadabdullah17

Still struggling with part b volume variance.
Understood the expenditure variance gave me correct answer of £2200 adverse(16000-18200)
You said to reverse the calculation but still not getting £1500 favourable ( correct answer on aat web)

Good luck with your result and future exams. How far through level 4 are you?

Krisso

I have given you the calculation about dust the wrong was around. Work out the budgeted fixed overhead absorption rate. £16000 / budgeted units 12,800 = £1.25 then multiply this by actual units and lastly subtract the budgeted £16,000 you will get the variance £1,500 favourable. I told you above to take the £17,500 from the budgeted £16,000 which is why it didn’t work out.

mahadabdullah17

@Krisso Thanks again, you are a star