AAT Assessment 1 Task 1.2

Hi @sophie_612 I'm assuming you have a list of all the formulas needed for your exam? for example, AQ X AP etc. These need to be remembered for the exam as you'll be using them throughout! Try write them all down as soon as your exam starts so can always look at them in the exam.

Price Variance:
AQ x AP - 70,000 x 0.5142857p (£36,000 / 70,000kg) = £36,000 (Answer In the question)
AQ x SP - 70,000 x 0.50p ( £25,000 / 50,000 Kg) = £35,000

Therefore £1,000 adverse as they've spent more money per unit than was budgeted.

Price Usage:

AQ x SP (Same as the bottom line above) 70,000 x 0.50p = £35,000
SQ x SP 60,000 (50,000 Budget / 5,000 budget units then x 6000 units actual) x 0.50p (£25,000 / 50,000kg) =£30,000

The standard quantity needs to be flexed from the budget to the actual results.

Answer = £35,000 - £30,000 = £5,000 adverse. (Useful tip is if the number on the bottom on the formulas if bigger than the top number it will be favorable.)

Labour Rate:

AH x AR 800 Hours x £10 per hour (£8,000 Actual Spend / 800 Actual Hours) = £8,000
AH x SR 800 Hours x £10 per hour (£10,000 Budget Spend / 1000 Budget Hours) = £8,000

£0 Variance.

Labour Efficiency:

AH x SR (Same as above bottom line again) = £8,000
SH x SR 1,200 Hours ( 10,000 Budget Hours / 5,000 budget units X 6,000 Actual Units) x £10 (£10,000 Budget Spend / 1000 Budget Hours) = £12,000

Answer: £4,000 Favourable (Bigger number on the bottom of the two formulas)

Hope this helps, let me know if you have any questions.

Good luck in your exam!