Variance

Question 1

How is the variance of quantity of sales calculated?

Answer 1

(AQ - SQ) x S contribution

Question 2

How is variance of sales price calculated?

Answer 2

(AP - SP) x AQ

Question 3

How is the variance of quantity of direct costs calculated?

Answer 3

(SQ - AQ) x SP

Question 4

How is the variance of prices of direct costs calculated?

Answer 4

(SP - AP) x AQ

Question 5

How is FOH calculated?

Answer 5

Budget - actual

Question 6

How is standard contribution worked out?

Answer 6

Sales price - VC

Question 7

What impact does sales price increase have on sales volume?

Answer 7

Adverse

Question 8

What impact does a successful advertising campaign have on sales volume?

Answer 8

Favourable

Question 9

What impact does labour pay rates have on sales volume?

Answer 9

No impact

Question 10

How is residual income calculated?

Answer 10

Profit - imputed interest

Question 11

What is the formula for return on capital?

Answer 11

Profit/CE

Question 12

What is the formula for divisional profit?

Answer 12

C-F

Question 13

What must be accounted for when reconciling e the budgeted contribution to the actual contribution?

Answer 13

All sales variances and all marginal cost variances

Question 14

Are favourable variances are always good for an organisation?

Answer 14

No

Question 15

Is Variance reporting is the comparison of the actual results with the original budget?

Answer 15

No

Question 16

What factors affect the decision to investigate a variance?

Answer 16

• Controllability of variance
• Cost of investigation
• Trend of variance

Question 17

What doesn’t help explain a favourable materials usage variance?

Answer 17

Achieving a lower output volume than budgeted

Question 18

What effect does discounts were taken from suppliers for early settlement of invoices have on materials price variance?

Answer 18

No impact

Question 19

What could cause a favourable variable overhead efficiency variance?

Answer 19

Working fewer hours than the flexed labour hours budget predicts

Question 20

When absorbing variable overheads on the basis of machine hours, the total variable overhead
variance can be worked out by comparing actual variable overheads in a period with the product of
the absorption rate and what?

Answer 20

(Actual output) × (Standard machine hours per unit)