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ACCA F5
Performance Management (PM)
业绩管理
ACCA Lecturer: Kimberley Gong
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1
2
What are variances?
Several variance
Content of chapter 15
3 Operating statement
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Basic variance analysis
What are variances?
Brought forward knowledge
•Variances explain the difference between Actual
results and expected result (Standard cost and
revenue).
• Favourable & Adverse
Sales variances, material, labour , variable overheads and
fixed overheads variances.
Actual result 10 10
Expected result 8 12
Variance 2(F) 2(A)
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Basic variance analysis
Material variance
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Basic variance analysis
Material variance
•Causes of material variances
–Favourable Material price
•Poorer quality
•Discounts due to buy in bulk
•Incorrect budgeting
–Favourable material usage
•Higher quality material used
•More efficient use of material
•Incorrect budgeting
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Basic variance analysis
Labour variance
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Basic variance analysis
Labour variance
Causes of labour variances
–Adverse labour rate
•Higher skilled staff employed
•Increase in overtime
•Unforeseen wage increase
–Adverse labour efficiency
•Lower skilled staff
•Fall in staff motivation
•Incorrect budgeting
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Basic variance analysis
Variable overhead variance
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Basic variance analysis
Variable overhead variance
Causes of variable overhead variances
–Favourable variable overhead variances
•Unexpected saving in cost of services
•More economic use of services
•Incorrect budgeting
–Favourable variable overhead efficiency
•Increase motivation
•Technology
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Basic variance analysis
Fixed overhead variance
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Basic variance analysis
Fixed overhead variance
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Basic variance analysis
Fixed overhead variance
Causes of fixed overhead variances
–Reasons for expenditure variance
•Inflation
•Seasonal effect
–Reasons for volume variance
•Changes in productivity
•Changes in demand
•Production lost due to strikes
–Reasons for capacity variance
•Idle time: machine breaks down
•Hours worked higher than budget
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Basic variance analysis
Sales variance
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Basic variance analysis
Sales variance
Causes of sales variances
–Selling in bulk
–Reduction in demand
–Competition
–inflation
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Basic variance analysis
Operating statement—Absorption costing
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Basic variance analysis
Operating statement—Marginal costing
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Basic variance analysis
Operating statement
The differences between marginal costing and
absorption costing are:
Sales volume contribution variance is included
instead of sales volume profit variance.
The only fixed overhead variance is the
expenditure variance.
The statement is from budgeted to actual
contribution then deducts fixed overheads to arrive
a profit
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