Urgent Help with Variances

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Help :?

Please can someone give me some help with remembering variances.
I have seen people use PURE AS AS as a reminder, but unfortunately, I cannot get me head round that either.

Is there an idiots guide to variances, or an easy way to remember them?

Any help would be gratefully received.

Anne :? :? :?

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Urgent Help with Variances

    i dunno if this will help you but what i did was wrote them over and over again untill they were stuck in my head as rhymes don't help me either.its horribly boring but did the trick.
    hols x
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Urgent Help with Variances

    I have seen someone use the word PAUS as a reminder of variances

    Price variances are based on
    Actual quantities
    Usage variances are based on
    Standard prices

    So for example:
    Material price variance = (SP - AP)x AQ
    Material usage variance = (SQ - AQ) x SP
    Labour rate variance = (SR - AR) x AQ
    Labour efficiency variance = (SQ - AQ) x SR

    I have also rearranged these formula so that they are as helpful as possible. Using my formulae as above, if the answer on the calculator is a negative, then it is a adverse variance and so on.

    Obviously this does not help with the fixed overheads variances, but these 4 are at least half of the battle. If you would like me to provide you with my formulae for the fixed overheads then I would not mind, just let me know

    Regards
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Urgent Help with Variances

    Hi Sjbherself

    If you could provide me with your formulae for the fixed overheads it would be most helpful. I need all the help that I can get at the moment.

    Thanks
    Anne
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Urgent Help with Variances

    As requested, my formulae for fixed overheads are:

    Please note that these formulae are based on the assumption that overheads are absorbed on a labour hours basis

    O/h expenditure = budget o/h - actual o/h

    O/h volume = (ASH - BSH) x SR
    = (standard hours for actual prod - budgeted standard hours) x standard absorption rate per hour

    O/h capacity = (AH - BH) x SR
    = (actual hours - budget hours) x standard abs rate per hour

    O/H efficiency = (ASH - AH) x SR

    When you have calculated all four of these variances, ensure that the total of the capacity and efficiency equal the volume to double check your answers.

    As previously said, I have only learnt these by writing them out time and time again. If you are going to rely on these formula, I would suggest that you spend some time doing questions with the formula so that you are confident you can use them and consistently get the right answer. There is no point spending time learning my formulae if you arent confident about using them. Then sit and learn them, and then do questions without the help of the formulae
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Urgent Help with Variances

    Hi sjbherself :lol:

    Many thanks for the variances. It is much appreciated. Have you already taken PEV or are you taking it in Dec?

    Anne
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Urgent Help with Variances

    It's a bit late at night so could be the reason why I can't work out how PURE AS AS works!! :oops: Could you advise, Thanks
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Urgent Help with Variances

    Hi don't worry I found out on a few other postings!

    I do find these acronyms(I think that's what they're called!) help. We were given one last week for overhead variances -

    Every Student Achieves
    Competence After Being
    Very Studious & Boring

    Efficiency = Standard - Actual x OAR
    Capacity = Actual - Budget x OAR
    Volume = Standard - Budget x OAR

    (Well I think that's how it works!! :lol: )

    Haven't had alot of time to put it into practise!!
    but am confident it will work! Just need to get my head around the other ones PAUS or PURE AS unless anyone has a better one!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Urgent Help with Variances

    Hi

    I would advise that you find one set of acronyms that work for you and stick with that one to avoid any confusion. Once they work for you, you can then start to understand the point of each of the variances and what they are asking for.
    Eva :D
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Urgent Help with Variances


    Totally agree with Eva.

    I couldn't get my head round any of the suggested ideas and came up with my own - it seemed to naturally evolve.

    Anyone else reading it would think it crazy, but it works for me, sticks in my mind and gets me through the questions.

    If you try to learn someone else's you have to learn that and the theory - doubling your work.

    :wink:
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Urgent Help with Variances

    Love the new picture you have Baggybooks - where is it?
    Eva :D
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Urgent Help with Variances


    Rome - looking towards St Peter's. I went on a day trip a couple of weeks ago. Long day, but brilliant.

    Decided to change my photo instead of revising.

    :cry:
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Urgent Help with Variances

    Hi there,

    Don't know if this will help or hinder but whenever I come across a question that asks for

    Material P rice variance
    Material U sage variance
    Labour R ate variance
    Labour E fficient rate

    I write the following on a piece of paper, PURE AS which means

    P A (Standard-Actual x A ctual
    U S (Standard-Actual x S tandard
    R A (Standard-Actual x A ctual
    E S (Standard-Actual x S tandard

    For example, the price variance question

    Work out the standard total price
    Work out the actual total price

    Standard price less actual price x actual unit price , ditto the rest.

    Hope this helps and if anyone reading this can see that I have it wrong will you please let me know.

    Violet

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