Month: July 2023

The cost of sales of Alex ltd comprises of direct materials and direct labour.

At the end of a trading period the following variances are calculated.

• direct materials price variance – £1,400 FAV
• direct materials usage variance – £900 ADV
• direct labour efficiency variance – £500 FAV
• direct labour rate variance – £1,200 ADV

If the actual cost of sales was £18 500, what was the standard cost of sales?

Select ONE answer:

1. £18,100
2. £18,300
3. £18,500
4. £18,700

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct – £18,500 + £1,400 – £900 + £500 – £1,200
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

The following information about the sale of a product is given:

• Budget sales volume in units – 1,000
• Budget sales revenue – £10,000
• Actual sales volume in units – 900
• Actual sales revenue – £9,900

Which of the following is true?

Select ONE answer:

1. Sales price variance – £100 ADV & Sales volume variance – £NIL
2. Sales price variance – £NIL & Sales volume variance – £100 ADV
3. Sales price variance – £900 FAV & Sales volume variance – £1,000 ADV
4. Sales price variance – £1,000 ADV & Sales volume variance – £900 FAV

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct – Sales Price Variance=(AP − SP)× Units Sold where AP=Actual selling price & SP=Standard price AND Sales volume variance = (Actual units sold – Budgeted units sold) x Budgeted price per unit. Therefore SPV = £11 – £10 * 1,000 == > £900 FAV AND SVV = 9000 – 1,000 * £10 == > £1,000 ADV
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

The standard material specification for a unit of production is 2 kg costing £7.50 per kilo.

Budgeted production for a period was 600 units, actual production was 620 units.

The actual material cost of purchasing 1,200 kilos was £9,400.

What was the material price variance?

Select ONE answer:

1. £100 adverse
2. £100 favourable
3. £300 adverse
4. £300 favourable

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – (Actual price – Standard price) x Actual quantity used = Material price variance — > £9,400 – £9,000 * (20 units * 2kgs * £7,.50) = £100 adverse
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.