Argh, PEV!

blacksheep
blacksheep Registered Posts: 56 Regular contributor ⭐
Hi. Just need a rant, if i can.
I'm doing PEV and PCR by distance learning, and can't for the life of me get the Fixed Overhead variances to stick in my head. Just cna't ever remember, when i get to the question, whether i should be using actual/budget/standard figures!:confused1:
I'm getting there, but so slowly i'm already afraid that i'll fail this part of the exam in dec. Anyone else have trouble with these? How do you remember them? Its really frustrating becuase i just can't move on past them.
Does anyone know if i can move onto PCR for a break without doing all of PEV first (as its laid out in the book, PCR is at the end, and the last thing you study).
Anyone else doing homestudy and suffering? :thumbdown:

Comments

  • 118 11kate
    118 11kate Registered Posts: 115 Dedicated contributor 🦉
    Hi

    What books are you using? I used Osborne Books and in that particular book was a set of scales that set out all the different formulas. Helped loads :thumbup:
  • 118 11kate
    118 11kate Registered Posts: 115 Dedicated contributor 🦉
    Hi Again

    Just looked back through the threads to find the one that helped another studier leading up to the June exams......shortcut below

    http://www.aat.org.uk/forums/showthread.php?t=18117

    Hope it help :001_smile:
  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034 mod
    Hopefully re-assurance

    Black Sheep
    I've put the two questions as quotes
    1. Does anyone know if i can move onto PCR for a break without doing all of PEV first (as its laid out in the book, PCR is at the end, and the last thing you study).
    This is the easier question
    Yes you can take the exams in the order that suits you
    2. I'm doing PEV and PCR by distance learning, and can't for the life of me get the Fixed Overhead variances to stick in my head. Just cna't ever remember, when i get to the question, whether i should be using actual/budget/standard figures!
    Here is a linkhttp://www.aat.org.uk/forums/showthread.php?t=17955

    I think the formulae can be counter-productive to many students.
    Try to think practically
    If the fixed overhead expenditure actually spent was more than the amount budgeted, you have an adverse fixed overhead expenditure variance.
    Perhaps the heating fuel in the factory was more expensive than the budget because of a general rise in fuel costs that had not been expected.

    If the volume of units produced was more than budgeted (then irrespective of costs, hours or anything else) the fixed overhead volume variance will be favourable. Another word for number of units produced is volume.

    Here we compare the standard cost of the number of units produced with the standard cost of the number of units we budgeted to produce. So only one figure is different (the number produced).

    There are two key reasons why there is a volume variance.
    1. The total number of hours used for production is different from the budgeted hours.
    2. The way the hours were used were either more efficient or less efficient than the standard expected.

    We call the hours the capacity (to produce). If more hours are worked than budgeted then we ought to produce more units. So more hours worked than budgeted means a fixed overhead capacity favourable variance.

    We call the way we use the hours worked efficiency. The standard cost card has a standard time per unit, so if we produced x units we can multiply the units produced by the standard time per unit to get the standard hours produced. In other words how long it should have taken to produce our output.
    If the actual hours worked are less than the standard hours produced, that shows the workforce were more efficient than the standard expected (a favourable fixed overhead efficiency variance)

    Let know if you'd like an example with some numbers.
    Sandy
    sandy@sandyhood.com
    www.sandyhood.com
  • blacksheep
    blacksheep Registered Posts: 56 Regular contributor ⭐
    So good to know i'm not the only one! Thanks for all the help!
    I'll take time - slowly does it - to look over those threads once or twice, and then might try to tackle a question again.

    If all else fails, i'll bump onto PCR and come back when my brain is less frazzled.
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