AMA Q22 - Chapter 8

Question 1

List the 7 types of operational causes of variances

Answer 1

• Material price
• Material usage
• Labour rate
• Idle time
• Labour efficiency
• Fixed overhead expenditure
• Fixed overhead volume

Question 2

Interdependence of variances

Answer 2

how one change in a variance can have a direct impact on another

Question 3

Three categories of variances

Answer 3

1. Controllable expenditure- poor purchase decisions
2. Uncontrollable expenditure - market changes causing fluctuations in price
3. Inaccurate standard - poor planning + use of unrealistic standard

Question 4

How is non-controllable variance calculated?

Answer 4

comparing the original standard to the revised one

revised

Question 5

How is controllable variance calculated?

Answer 5

Comparing the revised standard to the actual cost

actual