Chapter 9

Question 1

What is varaiance analysis?

Answer 1

The analysis of the difference between actual and expected results.

Question 2

1. What is a sales volume varaince?
2. How is it caluclated in terms of an adverse or favourable profit?
3. How is standard contribution per unit calculated?

Answer 2

1. The varaince between the units sold and the budgeted unit sales.
2. (see image)
3. Budgeted sales price - direct costs - variable costs

Question 3

1. What is the purpose of a material price variance?
2. How is it caluclated in terms of an adverse or favourable profit?

Answer 3

1. The differnce between what material cost per Kg compared to what you were expecting it to cost per Kg.
   2.

Question 4

1. What is the material usage variance?
2. How is it caluclated in terms of an adverse or favourable profit?

Answer 4

1. The variance between how much material you were expecting to use to manafacture a product vs how much was actually used. This is value at the standard price per unit.

Question 5

1. What is the laybour rate variance?
2. How is it caluclated in terms of an adverse or favourable profit?

Answer 5

1. The differnece between what the actual labour used cost and what is was expected to cost.
   2.

Question 6

1. What is the laybour efficiency variance?
2. How is it caluclated in terms of an adverse or favourable profit?

Answer 6

1. The difference between the hours that should have been worked for the nuber of units actually procused vs the actual number of hours worked. It is calculated as standard laybour rate per hour.
   2.

Question 7

1. What is the purpose of a variarble overhead expentiture variance?
2. How is it caluclated in terms of an adverse or favourable profit?

Answer 7

1. To ascertain whether the ompany paid more or less per hour for variable overheads than expected.
   2.

Question 8

1. What is the purpose of the variable production overhead efficiency variance?
2. How is it caluclated in terms of an adverse or favourable profit?

Answer 8

1. To ascertain whether the company paid more or less variable overheads by working more or less hours than expected.
   2.

Question 9

1. What is material total variance?
2. What is total laybour variance?
3. What is the total variable overhead variance?

Answer 9

1. Material price variance + material usage variance
2. Laybour rate variance + Labour efficiency variance.
3. Variable production overhead expenditure variance + Variable production overhead efficiency variance

Question 10

1. What is the fixed overhead variance?
2. How is it caluclated in terms of an adverse or favourable profit?

Answer 10

1. The difference between budgeted and actual expenditure on fixed overheads during the period.
   2.

Question 11

1. What is a operating statement / statment of variances?
2. How does it show this?

Answer 11

1. A statement to show the varaince to show the reconcilliation between budgeted cotribution and actual profit.
2. All favourable variances are added to the budget contribution and adverse variances are deducted.

Question 12

Dhow an oporating statement

Answer 12

Question 13

What is variable reporting?

Answer 13

The reporting of the difference between actual results and the flexed budget _{(not original budget)}