Backwards Variances - An example

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Hello people, I was looking through my notes yesterday and found an example of a backwards variance so I'm gonna try and post it here with the answer so those that are still panicking a little can rest a little, like the good student I am.<BR><BR>The question gives us a standard cost card with inks on it. The standard cost for inks is £4 per litre. In the additional information for the question we learn that we used 3200 litres of ink in the process and the Price variance for inks is £640 adverse.<BR><BR>We are asked to work out the total cost of ink purchased?<BR><BR>Heres how I handled it.<BR><BR>£640 adverse price variance/Actual usage 3200 litres = 0.20p<BR>We know the variance is adverse therefore the actual is more expensive than the standard so the actual is 0.20p more than the standard of £4 giving £4.20. Multiply by the actual usage of 3200 gives £13440.<BR><BR>I have a tick at the side of my working so i'm presuming this is correct. Its just a case of knowing your variances forwards then you should find it ok to work backwards.<BR><BR>Hope this has helped people and not hindered in any way. Good luck for tomorrow morning everyone.

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Backwards Variances - An example

    I did the same question and got to the same answer but I did it differently. <BR><BR>The variance is 640a. The actual litres used is 3200 so I calculated the standard cost of 3200 which is 4 x 3200 = 12800. the actual was 640 more expensive so 12800 + 640 = 13400. I suppose it doesnt matter how you arrive at the figure so long as its correct.<BR>Good luck tomorrow
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Backwards Variances - An example

    I worked it out in a similar fashion. Thanks for your help..<BR>Carol
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Backwards Variances - An example

    this sounds like the answer to the PEV masterclass paper, im really struggling. Does anyone have the answers to Task 1 parts a - n?<BR><BR>Thanks in advance<BR><BR>Sheephead11@hotmail.com
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Backwards Variances - An example

    The answers are on there way to you...<BR>Good Luck<BR>Carol
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Backwards Variances - An example

    I'm glad you posted this as it confirms that I did have the right method for it <img src="i/expressions/face-icon-small-smile.gif" border="0">

Categories

Privacy Policy