[Never_Give_Up1]

So I need a little clarification on this if someone can enlighten me. I thought they were the same thing… apparently not.

So the production V.V. is budgeted costs, budgeted price, and just a change in the output produced.

The flex budget variance is what I am trying to understand…. I just read that you use the new output to adjust the revenue and expenses.

Isn’t that the same thing???

FAR - 81
REG - 81
AUD - 82
BEC - 81

Ethics - Done
State License Exam - Done

License - Licensed CPA in Utah

[Whopper Warrior]

Flex Budget (SALES volume)

Actual Units * Contribution Margin

– std Fixed Costs

= Flexible Budgeted Income

Where the (std units – act units) * Contribution Margin is the Variance

V.V production (pRODUCTION volume)

(std unis – act units) * std cost + std F.O.H

One compares revenue the other compares expense, same concept; different measurement.

ALL 4 parts passed summer 13
Ethics October 13
Experience (waiting)

Becker Only

[Never_Give_Up1]

Thanks WW! You are always here to straighten me out on these issues.

FAR - 81
REG - 81
AUD - 82
BEC - 81

Ethics - Done
State License Exam - Done

License - Licensed CPA in Utah

[Never_Give_Up1]

Quick question, is the F.B.V. for the CM the actual or budgeted you are using?

FAR - 81
REG - 81
AUD - 82
BEC - 81

Ethics - Done
State License Exam - Done

License - Licensed CPA in Utah

[Whopper Warrior]

It is all standard.

When I think of volume, whether production or sales, it relates to efficiency; which directly relates to production efficiency; hours worked or material used.

The basic formula for anything dealing with efficiency is

(std units – actual units) * std cost / price

I had asked about this earlier and a user said they would avoid relating Variable volume variance to the production variance because you have to add Standard Fixed Factory Overhead (subtract for Flexible Budget). But that is a minor difference between the two and easily remembered as compared to memorizing 3 separate formulas that are the same thing.

And no problem, answering questions helps keep me sharp, and looking sharp in front of a client = $$$

ALL 4 parts passed summer 13
Ethics October 13
Experience (waiting)

Becker Only

[Author]

Replies