Question 1

A commercial spaceflight operator originally budgeted to launch 4 satellites, with total variable fuel costs of $8,000,000 and fixed operational costs of $12,000,000.

During the year, they actually launched 5 satellites. Actual total costs were $23,500,000.

What is the total budget variance when comparing actual results to a FLEXED budget?

Accepted Answer

1. Find variable cost per unit ($8m / 4). 2. Create flexed budget for 5 units (Fixed + 5*VC). 3. Compare flexed budget to actual costs.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Comparing actual costs to the original static budget of $20m, resulting in a $3.5m adverse variance.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 1

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