Student Doubts Forum

Exam Spring 18.19

Exam Spring 18.19

by Mariana Nunes Maurício -
Number of replies: 1

Good night,


I do not understand question 5 from Part III. Why do we consider that all the DM Variance is the Flex Value - Actual Value? This has already appeared in some exercises of the handbook, and I do not understand the relation.

In class, we show that the Total Variance of DM (just an example) = DM Price Variance + DM Usage Variance. However, in several exercises, we consider the Total Variance to be the Flex Value - Actual Value.

Thank you for the help,


Mariana

In reply to Mariana Nunes Maurício

Re: Exam Spring 18.19

by Pedro Pinto da Silva Perdigão -
Hello Mariana,

By the definition, the Total Direct Materials Variance or another variance of the same type can also be found by calculating the difference between the values on the Flexible Budget and the on the Actual Results.

I think this image helps with the explanation:



Good study!

Pedro Perdigão