Advanced: Preparation of an operating control statement and the calculation of labour, material and overhead variances The
Question:
Advanced: Preparation of an operating control statement and the calculation of labour, material and overhead variances The following statement has been produced for presentation to the general manager of Depart¬ ment X.
The general manager says that this type of state¬ ment does not provide much relevant information for him. He also thought that the profit for the month would be well up to budget and was surprised to see a large adverse profit variance.
You are required to
(a) re-draft the above statement in a form which would be more relevant for the general manager; (6 marks)
(b) calculate all sales, material, labour and over¬
head variances and reconcile to the statement produced in (a); (9 marks)
(c) produce a short report explaining the prin¬ ciples upon which your re-drafted statement is based and what information it provides.
(7 marks) (Total 22 marks) CIMA Stage 3 Management Accounting Techniques
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