# Re: Management Accounting HELP!

Original post by rubenokoenique
Dear all, I am struggeling to find a good answer to the following question, I hope you can help me to give a sufficient answer, as it might come up in the exam this Friday:

Q1

a) Explain the fundamentals of cost volume profit analysis focusing
especially on the validity of the assumptions on which this tool is
based.

absorption costing method.

Hi, im not sure if ur still on the TSR, but im a current accounting student looking for help to answer this question.

Really need help with this Question. I have been trying to solve it, but i just cant get my head around it, is it possible to help me. Thanks, Mustafi. Thank you for all the videos too.

Question:
Operating Statement

£ £ £
Budgeted profit 8,000
Sales volume variance 880 (A)
7,120
Selling price variance 3,560 (F)
10,680
Cost variances
A F
Direct labour rate 1,086
efficiency 240
Fuel Price 420
Usage 1,280
efficiency 180
Volume 1,760
3,880 1,766 2,114(A)
Actual profit 8,566

The company uses delivery miles as its cost nit, and the following details have been taken from the budget working papers for April 2022.

Expected activity
Charge to customers 200,000 delivery miles
Expected variable cost per delivery mile £0.30 per delivery mile
Direct labour (0.02 hours) £0.08
Fuel (0.1 litres) £0.04

The following additional information has been determined from the actual accounting records for April 2022.