ACCA MA · Chapter 13 · Question 6 of 10
A standard absorption costing operating statement shows a budgeted profit of $48,000 and the following variances: sales volume $3,000 A; sales price $4,500 F; total material $2,200 A; total labour $1,800 F; total variable overhead $600 A; fixed overhead expenditure $1,500 A; fixed overhead volume $1,200 A. What is the actual profit?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) $45,800
Explanation
Start from budgeted profit, add favourable variances and deduct adverse ones: 48,000 - 3,000 + 4,500 - 2,200 + 1,800 - 600 - 1,500 - 1,200 = $45,800. Total favourable = 6,300 and total adverse = 8,500, giving a net adverse movement of 2,200. Treating the labour variance as adverse would give $42,200.
More Overhead and sales variances and operating statements MCQs
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