Question

A company uses a standard absorption costing system. Actual profit last period was $$\$ 25,000$$, which was $$\$ 5,000$$ less than budgeted profit. The standard profit on actual sales for the period was $$\$ 15,000$$. Only three variances oocurred in the period: a sales volume profit variance, a sales price variance and a direct material price variance. Which of the following is a valid combination of the three variances? $$ \begin{array}{llll} & \begin{array}{l} \text { Sales volume } \\ \text { profit variance } \end{array} & \begin{array}{l} \text { Sales price } \\ \text { variance } \end{array} & \begin{array}{l} \text { Direct material } \\ \text { price variance } \end{array} \\ 0 & \$ 15,000 \mathrm{~A} & \$ 2,000 \mathrm{~F} & \$ 8,000 \mathrm{~F} \\ \circ & \$ 5,000 \mathrm{~A} & \$ 2,000 \mathrm{~A} & \$ 2,000 \mathrm{~F} \\ 0 & \$ 15,000 \mathrm{~A} & \$ 2,000 \mathrm{~A} & \$ 8,000 \mathrm{~A} \\ 0 & \$ 5,000 \mathrm{~A} & \$ 5,000 \mathrm{~F} & \$ 5,000 \mathrm{~A} \end{array} $$

   A company uses a standard absorption costing system. Actual profit last period was $$\$ 25,000$$, which was $$\$ 5,000$$ less than budgeted profit. The standard profit on actual sales for the period was $$\$ 15,000$$. Only three variances oocurred in the period: a sales volume profit variance, a sales price variance and a direct material price variance.
Which of the following is a valid combination of the three variances?
$$
\begin{array}{llll}
& \begin{array}{l}
\text { Sales volume } \\
\text { profit variance }
\end{array} & \begin{array}{l}
\text { Sales price } \\
\text { variance }
\end{array} & \begin{array}{l}
\text { Direct material } \\
\text { price variance }
\end{array} \\
0 & \$ 15,000 \mathrm{~A} & \$ 2,000 \mathrm{~F} & \$ 8,000 \mathrm{~F} \\
\circ & \$ 5,000 \mathrm{~A} & \$ 2,000 \mathrm{~A} & \$ 2,000 \mathrm{~F} \\
0 & \$ 15,000 \mathrm{~A} & \$ 2,000 \mathrm{~A} & \$ 8,000 \mathrm{~A} \\
0 & \$ 5,000 \mathrm{~A} & \$ 5,000 \mathrm{~F} & \$ 5,000 \mathrm{~A}
\end{array}
$$
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ACCA FMA/FA Foundations in Accountancy-Management Accounting Interactive Text (Practice Revision Kit Not Included)
ACCA FMA/FA Foundations in Accountancy-Management Accounting Interactive Text (Practice Revision Kit Not Included)
BPP Learning Media 1st Edition
Chapter 14, Problem 24 ↓

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- Actual profit last period was \$25,000. - Budgeted profit was \$30,000 (\$25,000 actual + \$5,000 less than budgeted). - Standard profit on actual sales was \$15,000. - Variances to consider: Sales volume profit variance, Sales price variance, Direct material  Show more…

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A company uses a standard absorption costing system. Actual profit last period was $$\$ 25,000$$, which was $$\$ 5,000$$ less than budgeted profit. The standard profit on actual sales for the period was $$\$ 15,000$$. Only three variances oocurred in the period: a sales volume profit variance, a sales price variance and a direct material price variance. Which of the following is a valid combination of the three variances? $$ \begin{array}{llll} & \begin{array}{l} \text { Sales volume } \\ \text { profit variance } \end{array} & \begin{array}{l} \text { Sales price } \\ \text { variance } \end{array} & \begin{array}{l} \text { Direct material } \\ \text { price variance } \end{array} \\ 0 & \$ 15,000 \mathrm{~A} & \$ 2,000 \mathrm{~F} & \$ 8,000 \mathrm{~F} \\ \circ & \$ 5,000 \mathrm{~A} & \$ 2,000 \mathrm{~A} & \$ 2,000 \mathrm{~F} \\ 0 & \$ 15,000 \mathrm{~A} & \$ 2,000 \mathrm{~A} & \$ 8,000 \mathrm{~A} \\ 0 & \$ 5,000 \mathrm{~A} & \$ 5,000 \mathrm{~F} & \$ 5,000 \mathrm{~A} \end{array} $$
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