CPA Exam Review News Blog

From The Inbox: Formula Discrepancies

Posted by Dr. Phil Yaeger on Aug 17, 2019 8:00:00 AM

It's time for another question from the Instructor Inbox! Collected from our Instructor Hotline, message boards, and chats with Phil, we take student questions and Instructor answers and post them to help other candidates. 

Today's question was sent to our Instructor Hotline inbox regarding BEC and variance analysis.

 

Question

I was using the AICPA practice exam and noticed that the formulas for Sales-Volume/Quantity Variance and Variable OH Spending Variance differ from the formulas that I have in my college textbooks AND in my Yaeger book. Why is that?

 

Answer

Standard cost-related variances can be defined and couched in several ways, including the formulas from the Yaeger textbook, what you see on the practice exams from the AICPA, and probably your college textbook.

Many times variable overhead expenses (actual AND standard AND the related variances) are directly related to factors such as direct labor hours or even direct labor spending. In this practice exam, the AICPA is providing factors required to calculate standard cost variances that differ from the standard cost formulas that textbooks often provide.

- - - - -

Instances like this are why we emphasize understanding the underlying concept and reading the questions carefully so that candidates can then adapt the standard formulas to fit the question asked.

If you're tired of memorizing the MCQs and want to STOP studying someday, reach out to us. #TeamYaeger and our Instructor Hotline can help you PASS the exam. No one wants to study forever.

 

Start Your Free Trial Now

Subscribe to Email Updates

Recent Posts