Tag: Topic 11

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

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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.

A business produces the following actual figures.

• Production – 210 units
• Quantity of direct material – 483 tonnes
• Total cost of direct materials – £1,449,000

A standard unit uses 2.25 tonnes of material at a price of £3,100 per tonne.

What are the usage and price variances?

Select ONE answer:

1. Usage – £32,550 ADV & Price – £48,300 FAV
2. Usage – £32,550 FAV & Price – £48,300 ADV
3. Usage – £176,700 ADV & Price – £48,300 FAV
4. Usage – £176,700 FAV & Price – £48,300 ADV

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 – Usage — > £1,449,000 – £1,464,750 (210 * 2.25 * £3,100) & Price — > £1,497,300 (483 tonnes * £3,100) – £1,449,000 = £48,300 FAV
2. Not correct
3. Not correct
4. Not correct

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