Chapter 22 Answers

Jul 17, 2026

Uploaded by Noah

Chapter 22 answers focus on sales variances and operating statements, covering core variance definitions and how they affect profit analysis. The material explains selling price variance, sales volume profit variance, and the operating statement structure, including key ideas of materiality, controllability, and variance trends. It includes multiple true/false checks and step-by-step numerical calculations for marginal and absorption costing approaches, such as direct material price and usage variances, fixed overhead expenditure and absorption, and sales volume and contribution-based variances. Calculations use budgeted versus actual values to derive favorable or adverse outcomes.

LanguageEnglish

CategoryExam

FormatDOCX

Pages6

Reading Time15 min

AccessFree to download

Sales variances and operating statements Answers TASK №1: DEFINITIONS selling price variance sales volume profit variance operating statement Materiality, controllability/ variance trend Benefits/ costs Forecasts/ budget TASK № 2: TRUE/FALSE A B A A B(contribution) A TASK № 3: FOUNDATION LEVEL QUESTIONS B The only fixed overhead variance in a marginal costing statement is the fixed overhead expenditure variance. This is the difference between budgeted and actual overhead expenditure, calculated in the same way as for an absorption costing system. There is no volume variance with marginal costing, because under or over absorption due to volume changes cannot arise. D Raising prices in response to higher demand would result in a favourable selling price variance. A $ Total actual direct material cost 2,400 Add back variances: direct material price (800) direct material usage 400 Standard direct material cost of production 2,000 Standard material cost per unit $10 Number of units produced (2,000/$10) 200 A Since there was no change in inventories, the usage variance can be used to calculate the material usage. Saving in material used compared with standard =$400(F)/$2 per kg = 200 kg Standard material usage for actual production (200 units * 5kg) 1,000 kg Usage variance in kg 200 kg (F) Actual usage of material 800 kg D $ 200 units should sell for (* $70) 14,000 but did sell for 15,200 Selling price variance 1,200 (F) C Budgeted sales volume per month =Budgeted material cos t of sale / Standard material cost per unit =$2,300/$10= 230 units Budgeted profit margin per unit =Budgeted monthly profit marg in / Budgeted monthly sales volume = $6,900/230 = $30 per unit Budgeted sales volume 230 units Actual sales volume 200 units Sales volume variance in units 30 units (A) Standard profit per unit × $30 Sales volume variance in $ $900 (A) B Actual expenditure = $(48,000 + 2,000) = $50,000 Overhead absorbed = $(50,000 – 8,000) = $42,000 Overhead absorption rate per unit = $48,000  4,800 = $10 Number of units produced = $42,000 / $10 = 4,200 D Total standard cost of material purchased – actual cost of material purchased = Price variance Total standard cost = $21,920 + $1,370 = $23,290 Standard price per kg = $23,290/6,850 = $3.40 B Actual sales 2,550 unit Budgeted sales 2,400 units Variance i

Jul 17, 2026

Uploaded by Noah