ACCA AK Management Accounting (MA) Standard Costing and Variance Analysis 2

Question 1

The fixed overhead expenditure variance compares:

Accepted Answer

Budgeted fixed overheads with actual fixed overheads

Answer

Fixed overhead expenditure variance = Budgeted fixed overheads – Actual fixed overheads, showing whether spending on fixed costs was more or less than planned.

Question 2

A company budgets to produce 1,000 units with fixed overheads of £5,000. Actual production is 900 units and actual fixed overheads are £5,000. What is the fixed overhead volume variance?

Accepted Answer

£500 adverse

Answer

Volume variance = (Actual production – Budgeted production) × Standard rate = (900 – 1,000) × £5 = £500 adverse, as fixed overheads are under-absorbed.

Question 3

The fixed overhead capacity variance measures:

Accepted Answer

The difference between actual hours worked and budgeted hours, valued at the standard rate

Answer

Capacity variance = (Actual hours worked – Budgeted hours) × Standard fixed overhead rate per hour, reflecting whether the workforce was active for more or fewer hours than budgeted.

Question 4

The variable overhead efficiency variance is most similar in structure to:

Accepted Answer

The direct labour efficiency variance

Answer

Both the variable overhead efficiency variance and the labour efficiency variance are driven by the difference between standard and actual hours, valued at the respective standard rate per hour.

Question 5

A company has a standard selling price of £40 per unit. Actual sales were 500 units at £38 per unit. What is the sales price variance?

Accepted Answer

£1,000 adverse

Answer

Sales price variance = (Standard price – Actual price) × Actual units sold = (£40 – £38) × 500 = £1,000 adverse.

ACCA Applied Knowledge Practice Test

ACCA Applied Knowledge Practice Test

ACCA AK Management Accounting (MA) Standard Costing and Variance Analysis 2