[Anonymous]

I’m taking BEC later this week and I feel I have most the sections covered and I’m scoring pretty high on progress tests on almost all sections on becker.. save for one. BEC-2 and the culprit is Variance Analysis.

I got Price and Materials down, using the PURE DADS pneumonic but Overhead variance.. GAGH. I can’t do it for the life of me. Becker questions just throw too much info at me and I get confused on what I should be taking as the standard, the budget or the actual. I used to have this area covered (I passed BEC, but it was quite long ago).

I’m thinking about spending less time on OH variance and more time polishing the other areas. (COSO, IT, Econ and financial management, NPV etc)

I honestly can’t remember if there were many variance questions on BEC. But the breakdown has this section as 10-14%, so at the very most I could end up with 10 OH variance problems, but I would think that’s unlikely, 4-5 may be more realistic. Would it be wise for me to skip this section in favor of others? Any advice would be appreciated. Thanks 🙂

First post!

[SoFlaAuditor]

I think that if you have a firm grasp on other areas, you shouldn't skip an area that you would consider weak. A weak area is more likely to hinder your score significantly than an area that you know well but need to “polish”. Good luck!

REG - 83
BEC - 81
AUD - 73, 92
FAR - 90

Done!

[Uhartsoccer21]

I felt same way over the weekend, for DM and DL variances I think the mnemonic becks gives is sufficient, but with O/H variance just relying on A BA BS A – SEV I don't think is sufficient. I would stare at those problems for 10 min and not know what numbers belonged where. Yesterday I decided to go back to the book and I wrote down the exact formulas, it sounds like your using Becker so I would memorize the formulas on page B-2 46. After using this page and applying it to a comprehensive problem it all came together.

A - 89 10/23/2014
R - 90 2/27/2014
F - 75 5/25/2014
B - 83 8/28/2014

[sep7uakron]

If you remember PURE DADS for the exam, you should be fine. The OH variances, at least what I had, were straight forward.

AUD: April 2014 - 85
REG: May 2014 - 83
BEC: July 2014 - 82
FAR: August 2014 - 83

I'M DONE!!

[Anonymous]

@SoFlaAuditor – You're right. I know it's a problem area, I just need to clamp down and figure it out. Thanks for the advice.

@Uhartsoccer21 Yup.. SEV, A BA BS A just isn't doing it any more. I've only been doing becker. I think it's time to look on youtube or try to find some free materials to get me through this section of the test..

@sep7uakron Thanks for the insight. At least I have the “easier” variances down..

[Whopper Warrior]

Can you please give an example? A question you got wrong, or trips you up, and the reasoning behind YOUR answer.

ALL 4 parts passed summer 13
Ethics October 13
Experience (waiting)

Becker Only

[Anonymous]

Reviewing variances and I was able to get this question right, but it was still tricky for me:

A company uses a standard costing system. At the current year, the company provides the following overhead information:

Actual OH Incurred:

Variable – $90,000

Fixed – $62,000

Budgeted fixed overhead – $65,000

Variable overhead rate (per direct labor hour): $8

Standard hours allowed for actual production: 12,000 hours

Actual labor hours used: 11,000 hours

What amount is the variable overhead efficiency variance?

a. $6,000 favorable.

b. $8,000 favorable.

c. $8,000 unfavorable.

d. $2,000 unfavorable.

Here is my thought Process:

Using “SEV” and A BA BS A pneumonic, I need to find Efficiency, which is:

Budgeted Rate vs Actual Hours and Budgeted Rate vs Standard hours.

Actual hours = 11K, Standard hours = 12K. Now no where in the question above does it state the “Standard” or “Budgeted” Rate. There's the fixed OH rate, but that's not what I needed. I just assumed that the $8 was the standard and I got $8,000 favorable, which was the answer. The fact pattern is just confusing for me. I'll post up another question relating to Volume soon, I can never get those ones..

[Anonymous]

Okay here's a Spending efficiency problem that I originally got wrong. But after typing all this up, it makes more sense to me.. I'm getting PURE (DL) mixed up with OH.

Question:

Water Bucket, Inc. manufactures water pumps and uses a standard cost system. The standard factory overhead costs per water pump are based on direct labor hours and are shown below:

Variable overhead (4 hours at $8/hour) = $32

Fixed overhead (4 hours at $5*/hour) = $20

Total overhead cost per unit = $52

*Based on a capacity of 100,000 direct labor hours per month.

The following additional information is available for the month of November.

22,000 pumps were produced although 25,000 had been scheduled for production.

94,000 direct labor hours were worked at a total cost of $940,000.

The standard direct labor rate is $9 per hour.

The standard direct labor time per unit is four hours.

Variable overhead costs were $740,000.

Fixed overhead costs were $540,000.

The variable overhead spending variance for November was:

a. $12,000 favorable.

b. $60,000 favorable.

c. $24,000 favorable.

d. $96,000 favorable.

My logic:

Try to solve for the “S” in SEV. Using A BA BS A, I need to find:

Actual Rate x Actual Hours and Budgeted Rate x Actual Hours

Actual Rate and hours is pretty easy to find: 940K total Spend / 94K hours = $10 actual Rate.

Since the Actual hours is a given, (94K) I need to find the Budgeted Rate, which looks to be $9 an hour, because hey it's a rate that says STANDARD. But nope, when I do the calculation, I get nowhere as the answer is 94K variance. I then realized by mistake and that the $9K is the DIRECT LABOR rate and my previous inputs above were completely wrong.

I then see that the actual variance was staring me in the face, as its $740K, compare that to $8 per hour (budgeted Rate) times the actual hours worked and I got 752,000, which is a favorable variance of 12K.

I only got this question right because 94K was not an answer.. otherwise I would have been screwed. Anyway, that's my convoluted reasoning while working that question. Thanks for reading 🙂

[M.O.D.]

Re first:

variable OH rate is always a standard, as it cannot be anything else, ie actual.

This is because it is estimated annual costs/estimated production.

BA Mathematics, UC Berkeley
Certificates in CPA and EA preparation, College of San Mateo
CMA I 420, II 470
FAR 91, AUD Feb 2015 (Gleim self-study)

[Author]

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