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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


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)



Material variance



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




Labour variance



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




Variable overhead variance



Variable overhead variance

Causes of variable overhead variances

–Favourable variable overhead variances

•Unexpected saving in cost of services

•More economic use of services


–Favourable variable overhead efficiency

•Increase motivation

•Technology



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



Sales variance



Sales variance

Causes of sales variances

–Selling in bulk

–Reduction in demand

–Competition

–inflation



Operating statement—Absorption costing



Operating statement—Marginal costing



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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Download - · PDF fileBasic variance analysis Fixed overhead variance Causes of fixed overhead variances ... ACCA Research Institute. Title: PowerPoint 演示文稿 Author: Administrator

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