fixed overhead volume help on question please

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topcat
topcat Registered Posts: 452
in AAT Level 4 (Level 8 in Scotland)
Im stuck again surprise suprise

if anyone could help that would be great please ;)

1) Shouldn't the fixed overhead volume be £3450 F not £3600
(£30,000/500,000) * 560,000 = £3600



A company packs tomatoes in tins.
The following budgetary control report has been provided:
7.gif
The variances shown in the following operating statement have been
calculated accurately, although for some it is not known if they are adverse or favourable.
Complete the operating statement, including the budgeted cost for
the 560,000 units of production and stating whether each variance is adverse
or favourable. Show the total variances in the right hand column with a minus
(-) sign if they need to be deducted from the budgeted cost for actual
production. Make sure that the total agrees with the actual cost of production.

http://osbornebooks.rtahosting.co.uk/osborne24/q7.asp

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  • SamiH
    SamiH Registered Posts: 179 Beyond epic contributor 🧙‍♂️
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    How I have worked it out is as follows;

    Budgeted Tins - 500,000
    Actual Tins - 560,000
    Volume Variance - 60,000 Tins

    Budgeted fixed overhead per Tin = £30,000 / 500,000 Units = £0.06 per Tin

    The fixed overhead volume variance calculation is the 60,000 Tins volume variance x £0.06 per Tin = £3,600 and its Favourable as they made more than the budget.

    Does this help?
  • topcat
    topcat Registered Posts: 452
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    SamiH wrote: »
    How I have worked it out is as follows;

    Budgeted Tins - 500,000
    Actual Tins - 560,000
    Volume Variance - 60,000 Tins

    Budgeted fixed overhead per Tin = £30,000 / 500,000 Units = £0.06 per Tin

    The fixed overhead volume variance calculation is the 60,000 Tins volume variance x £0.06 per Tin = £3,600 and its Favourable as they made more than the budget.

    Does this help?

    great explanation you have made it easy now , thank you very much :-)
  • SamiH
    SamiH Registered Posts: 179 Beyond epic contributor 🧙‍♂️
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    welcome topcat :)

    When is your exam booked in for?
  • topcat
    topcat Registered Posts: 452
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    Beginning of February I'm not sure if I have started revision a bit too early though? Just seems a lot to learn, carnt have the regret of not trying If I did fail that's for sure I suppose

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