Page 392 - F2 - MA Integrated Workbook STUDENT 2018-19

Chapter 15

Operating statements

Variances are often summarised in an operating statement. The statement allows for
budgeted values to be reconciled with actual values.

If the statement starts with budgeted profit (absorption costing) or possibly budgeted
contribution (marginal costing) then:

 Add the favourable variances as they increase profit/contribution

 Subtract the adverse variance as they decrease profit/contribution.

Test your understanding 11

The budgeted contribution for last month was $43,900 but the following
variances arose

Variance $

Sales price 3,100 A

Sales volume contribution 1,100 A

Material price 1,986 F

Material usage 2,200 F

Labour rate 1,090 A

Labour efficiency 512 A

Variable overhead expenditure 1,216 F

Variable overhead efficiency 465 A

The actual contribution for last month was $

384