PEV December 2005 Task 1.2

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:26AM in AAT student discussion
(a) (ii) Calculate the material price variance in UK pounds for paper for November

Right, so I can get the first rate for the variance (£58,500/130,000kgs)which gives me 0.45. But I cannot see where I get the 0.50 from to complete the question:-

(0.45-0.50)x130,000 = £6,500(F)

Does it somehow come from the 5% calculated in question (a) (i) ?

Thanks

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PEV December 2005 Task 1.2

    The 0.50 comes from the standard price of each unit, it is on page 2 in the data given. I'm so glad you asked this question as I was stuck on it and got too lazy to find it out!!! :lol::lol:
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PEV December 2005 Task 1.2

    lol !

    Damn the AAT and their mind games!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PEV December 2005 Task 1.2

    Thank you SOO much for that, I ended up havin a right old paddy with that paper and threw it all over the table in a strop, oh well, I had better go and uncrease it now an try again :lol:
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PEV December 2005 Task 1.2

    I think when I first sat this paper I got everything up until the variance. So plain sailing from here I hope!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PEV December 2005 Task 1.2

    OK, spoke too soon.

    How the hell do I remember how to split the variance in task (iii)???
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PEV December 2005 Task 1.2

    Don't ask me, I had to lie down in a dark room for an hour or so after finding out where the 0.50 came from............. :idea:
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PEV December 2005 Task 1.2

    lol
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PEV December 2005 Task 1.2
      Identify your cost per kg of paper
    X5wrangler has done that for you
    The 0.50 comes from the standard price of each unit
      Divide by the exchange rate when the standard was set
      Multiply by the exchange rate for November
      Now you have a
    revised standard price per kg
      Find the price variance caused by the difference between the original standard and the revised standard price per kg
      Find the price variance caused by the difference between the revised standard and the actual price per kg

    See how you get on Bryan.

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