Ch14: Performance Analysis and Behaviour Aspects

Question 1

Purpose of Planning Variances

Answer 1

Original budget is revised with the benefits of hindsight.

Question 2

Purpose of Operational Variances.

Answer 2

Actual performance differs from a revised standard.

Question 3

Proforma for Calculating:
(1) Material PRICE PLANNING Variance

Answer 3

SHOULD –> BUDGETED Price Per Kg
SHOULD NOW –> REVISED Price Per Kg

MULTIPLY ACTUAL Quantity of Materials

Question 4

Proforma for Calculating:
(2) Material PRICE OPERATIONAL Variance

Answer 4

SHOULD NOW –> ACTUAL Qty of Materials * REVISED Price Per Kg
DID –> ACTUAL Qty of Materials * ACTUAL Price Per Kg

Question 5

Proforma for Calculating:
(3) Material USAGE PLANNING Variance

Answer 5

SHOULD –> ACTUAL Production * BUDGETED Materials Per Unit
SHOULD NOW –> ACTUAL Production * REVISED Materials Per Unit

MULTIPLY BUDGETED Price Per Kg

Question 6

Proforma for Calculating:
(4) Material USAGE OPERATIONAL Variance

Answer 6

SHOULD NOW –> ACTUAL Production * REVISED Materials Per Unit
DID –> ACTUAL Use of Materials

MULTIPLY BUDGETED Price Per Kg

Question 7

Proforma for Calculating:
(1) Labour RATE PLANNING Variance

Answer 7

SHOULD –> BUDGETED Labour Rate
SHOULD NOW –> REVISED Labour Rate

MULTIPLY ACTUAL Labour Time

Question 8

Proforma for Calculating:
(2) Labour RATE OPERATIONAL Variance

Answer 8

SHOULD NOW –> ACTUAL Labour Time * REVISED Labour Rate
DID –> ACTUAL Cost

Question 9

Proforma for Calculating:
(3) Labour EFFICIENCY PLANNING Variance

Answer 9

SHOULD –> ACTUAL Production * BUDGETED Labour Time
SHOULD NOW –> ACTUAL Production * REVISED Labour Time

MULTIPLY Standard Labour Rate

Question 10

Proforma for Calculating:
(4) Labour EFFICIENCY OPERATIONAL Variance

Answer 10

SHOULD NOW –> ACTUAL Production * REVISED Labour Time
DID –> ACTUAL Time

MULTIPLY Standard Rate Per Hour

Question 11

Proforma for Calculating:
(1) Market Size Variance - PLANNING

Answer 11

SHOULD –> BUDGETED Sales Qty
SHOULD NOW –> ACTUAL Market Size * BUDGETED Market Size

MULTIPLY ACTUAL Standard Contribution

Question 12

Proforma for Calculating:
(2) Market Share Variance - OPERATIONAL

Answer 12

SHOULD NOW –> ACTUAL Market Size * BUDGETED Market Size
DID –> ACTUAL Sales Quantity

MULTIPLY ACTUAL Standard Contribution