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ACCA Applied Skills · Performance Management · Planning and operational variances

Which variance is classed as an operational variance when a revised (ex-post) material price is used as the benchmark?

The operational material price variance compares the actual price paid with the revised ex-post standard price. It measures buying performance against a realistic benchmark, while the original-to-revised price difference is a planning variance.

  1. AMaterial price variance, comparing actual price with the revised standard priceCorrect
  2. BMaterial price variance, comparing original standard price with the revised standard price
  3. CMaterial usage planning variance
  4. DSales volume variance

Explanation

Operational price variance compares the actual price paid with the revised ex-post price, because it reflects controllable buying performance. The difference between original and revised price is a planning variance, which is not controllable by the buyer.

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