0. CIMA Paper P1 Management Accounting
江西财经大学 会计学院
熊家财

1. 8
Chapter
Variance analysis

2. Chapter Content Budgeted Profit Actual Profit Difference
Variances Analysis
Material
Variances
Labour
Variances
Variable
Overhead
Variances
Fixed
Overhead
Variances
Sales
Variances

3. Section 1 Standard costing & variance analysis
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Section 1 Standard costing &
variance analysis

4. Standard costing

5. Variance analysis

6. Type of standard

7. Section 2 Sales variance
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Section 2 Sales variance

8. Sales Variances
Total Sales
Variance
Price Variance
Volume Variance

9. Sales Variances

10. Sales Variances
(1)Value at standard profit per unit —— using Absorption costing
(2) At standard contribution per unit ——using marginal costing
(3) At standard revenue per unit ——rarely used

11. Sales Variances
Example 1
Example 2 in p313

12. Section 3 Material cost variance
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Section 3 Material cost variance

13. Material Variances Total Material Variance Usage Variance
Price Variance
Usage Variance

14. Material Cost Variances
Definition

15. Material Cost Variances

16. Material Cost Variances
Example 2
Example 3 in p314

17. Material Cost Variances

18. Section 4 Labor cost variance
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Section 4 Labor cost variance

19. Labour Variances Total Labour Variance Rate Variance
Idle Time Variance
Efficiency Variance

20. Labor Cost Variances
Definition

21. Labor Cost Variances

22. Labor Cost Variances
Example 3
Example 5 in p320

23. Labor Cost Variances Idle time
When idle time occurs, the efficiency variance should be separated into two parts:
(1) An idle time variance
(2) An efficiency variance during active working hours

24. Labor Cost Variances
Idle time
Active working time

25. Labor Cost Variances
Example 4
Example 5 in p320

26. Labor Cost Variances
Expected idle time

27. Labor Cost Variances
Example 5
Example in p322

28. Section 5 Variable overheads variance
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Section 5 Variable overheads variance

29. Variable Overhead (V/O/H) Variances
Total V/O/H
Variance
Expenditure (Rate) Variance
Efficiency Variance

30. Variable Overhead (V/O/H) Variances
VOH are normally assumed to vary with labor hour worked

31. Variable Overhead (V/O/H) Variances
Example 6

32. Variable Overhead (V/O/H) Variances
Idle time
It is assumed that variable production overhead is incurred during active hours only.
Then, VOH variance should calculated at active hours worked.

33. Variable Overhead (V/O/H) Variances
Example 7
Example 8 in p327

34. Section 6 Fixed overheads variance
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Section 6 Fixed overheads variance

35. Fixed Overhead (F/O/H) Variances
Total F/O/H
Variance
Expenditure Variance
Volume Variance
Capacity
Efficiency

36. Fixed Overhead (F/O/H) Variances
Definition

37. Fixed Overhead (F/O/H) Variances
Unit base

38. Fixed Overhead (F/O/H) Variances
Example 8
Example in p322

39. Fixed Overhead (F/O/H) Variances
Labor hour base

40. Fixed Overhead (F/O/H) Variances
Labor hour base

41. Fixed Overhead (F/O/H) Variances
Example 9
Example 10 in p332

42. Section 7 Operating statement
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Section 7 Operating statement

43. Section 7.1 AC Operating statement
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Section 7.1 AC Operating statement

44. Operating statement
Example 10

45. Operating statement
Example 10
Example 11 in p 335

46. Operating statement
Example 10

47. Operating statement
Example 10

48. Section 7.2 MC Operating statement
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Section 7.2 MC Operating statement

49. MC Operating statement

50. MC Operating statement
Example 10

51. Section 8 Working backward to VC
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Section 8 Working backward to VC

52. Working backward
Example 11

53. Section 9 Variance analysis using ABC
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Section 9 Variance analysis using ABC

54. Variance analysis using ABC
Example 12
XX produces the Unit and all overheads are associated with the delivery of Units to its customers.
Budget details for the period include $8,000 overheads, 4,000 Units output and 40 customer deliveries.
Actual results for the period are $ 7,800 overheads, 4,200 Units output and 38 customer deliveries.

55. Summary