Subdividing Variances & this years Examiner (for PEV & PCR)

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

Does anyone have any notes on subdividing variances? I have just about got my head around the variance formulas but there's not many tasks/past papers to practice the subdividing.

Also does anyone know if the person writing December 2006 PCR & PEV exams is the same as the June 2006 and December 2005 exams?

Thanks :)

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Subdividing Variances & this years Examiner (for PEV & PCR)

    To calculate your inflaction price you will be give some kind of index number or additional information

    i.e:- (based on additional information)

    Labour Efficiency subdivision

    actual hours were 36,800 for 20,000 units of output costing 184,000, standard hourly output was 2hrs @ £4.85.

    Once trained efficiency will be improved by 15%.

    Calculations:

    Labour Efficiency Variance = £15,520 (F)
    (40,000(2x20,000)-36,800)) x 4.85 = 5520

    Variance due to untrained workers = £26,772 (A)
    36,800hrs x 15% = 5,520hrs
    36,800hrs - 5,520hrs = 31,280hrs
    (36,800hrs - 31,280hrs) x 4.85 = 26772

    Variance due to other reasons = £42,292 (F)


    Regards

    Dean

    p.s if you have time and want to prove the variance due to other reason you can do so like this:-

    budgeted hours = 40,000hrs
    revised standard = 31,280hrs

    (31,280 - 40,000) x £4.85 = 42292F
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Subdividing Variances & this years Examiner (for PEV & PCR)

    i.e:- (based on index numbers)

    Material Price subdivision

    actual litres used were 36,000 @ £1.20 per litre the standard being £1.50

    The standard was based on a price indexation of 15 but when the actual production took place it was 20.

    Calcualtions:

    Material Price Variance = £10,800 (F)
    (1.50-1.20) x 36,000 = 10800

    Variance due to indexation = £3,600 (A)
    1.20 x (20/15) = 1.60
    1.50 - 1.60 = 0.10
    0.10 x 36,000 = 3600

    Variance due to other reasons = £14,400 (F)

    Regards

    Dean

    p.s if you have time and want to prove the variance due to other reason you can do so like this:-

    actual price 1.20
    revised standard 1.60

    (1.60-1.20) x 36,000 = 14400(F)
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Subdividing Variances & this years Examiner (for PEV & PCR)

    Thanks Dean - enjoyed those :idea:

    Helen

    :wink:
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Subdividing Variances & this years Examiner (for PEV & PCR)

    Yes, thank you Dean. That was a great reply, sounds like you know what your talking about :D

    K

Categories

Privacy Policy