Study Surgery

A. There is no easy formula for sub-dividing variances, but it might be helpful to split the question into more manageable parts, as below: Material X is purchased from overseas and the contract to purchase the material has been fixed at 24 Allands per kg. When the contract was arranged, the exchange rate was 1 Alland = £2.40. Last month, 1,025kg of material X were purchased at a cost of £62,525.



In effect, we are saying that of the total price variance of £3,485 (A), the amount due to the exchange rate difference is £2,460 (A) and the remainder, £1,025 (A), is due to other reasons. Simon Deane BA ACA is Managing Director of a private training provider