Case-based variance analysis Qs for US CMA Part 1 — exam style with 3-level variances.

Case-based variance analysis Qs for US CMA Part 1 — exam style with 3-level variances. 👇

*Part A: 5 Cases with Questions*

*Case 1: Basic DM + DL Variances*  

Gamma Co budgeted 10,000 units. Actual 12,000 units.  

Standard: 2 lbs DM @ $5/lb, 1.5 hrs DL @ $20/hr  

Actual: 25,000 lbs DM purchased + used @ $5.20/lb, 17,000 hrs DL @ $21/hr  

Q1. DM price variance? F/U  

Q2. DM quantity/efficiency variance? F/U  

Q3. DL rate variance? F/U  

Q4. DL efficiency variance? F/U  

*Case 2: OH 3-Variance Method*  

Delta budgeted 8,000 DL hours. Fixed OH $160,000. VOH rate $10/DL hr.  

Actual: 7,500 DL hours, Actual OH $245,000. Produced 3,900 units. Standard = 2 hrs/unit  

Q5. Budget/Controllable variance?  

Q6. Volume/efficiency variance?  

Q7. Spending variance?  

*Case 3: Sales Variances*  

Epsilon budgeted: 5,000 units @ $40 = $200,000  

Actual: 5,500 units @ $38 = $209,000  

Industry volume increased 10%. Company market share fell from 20% to 19%  

Q8. Sales price variance?  

Q9. Sales volume variance?  

Q10. Sales mix vs sales quantity variance if 2 products? _Concept only_

*Case 4: Material + Yield Variance*  

Zeta uses 3 kg Input A + 2 kg Input B = 5 kg input for 1 unit output. Standard cost: A $4/kg, B $6/kg  

Actual: 11,000 kg A @ $4.10, 7,500 kg B @ $5.80 used to make 3,600 units  

Q11. Material mix variance? F/U  

Q12. Material yield variance? F/U  

Q13. Total material cost variance?

*Case 5: 4-Variance OH Method + Interpretation*  

Theta standard: 1 DL hr/unit, VOH $8/hr, FOH $12/hr based on 10,000 hrs capacity  

Actual: 9,500 units, 10,200 DL hrs, Actual VOH $78,000, Actual FOH $125,000  

Q14. VOH spending + efficiency variance?  

Q15. FOH budget + volume variance?  

Q16. If volume variance is unfavorable, what does it mean?

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*Part B: Answer Key + Workings*

*A1. DM + DL Variances*  

Std qty for 12,000 units = 12,000×2 = 24,000 lbs. Std hrs = 12,000×1.5 = 18,000 hrs  

Q1. DM Price = AQ×(AP-SP) = 25,000×(5.20-5) = *$5,000 U*  

Q2. DM Qty = SP×(AQ-SQ) = 5×(25,000-24,000) = *$5,000 U*  

Q3. DL Rate = AH×(AR-SR) = 17,000×(21-20) = *$17,000 U*  

Q4. DL Eff = SR×(AH-SH) = 20×(17,000-18,000) = *$20,000 F*  

Net labor variance = $3,000 U. Less hrs used but paid more per hr.

*A2. OH 3-Variance*  

Std rate VOH = $10/hr. FOH rate = 160k/8k = $20/hr. Total std rate = $30/hr  

Budgeted OH = 160k + 10×8k = $240,000  

Q5. Budget/Controllable = Actual OH - Budgeted OH @ actual hrs = 245k - [160k + 10×7,500] = 245k - 235k = *$10,000 U*  

Q6. Volume = FOH rate × (Budgeted hrs - Std hrs allowed) = 20×[8,000 - 3,900×2] = 20×[8,000-7,800] = *$4,000 U*  

Q7. Spending = Actual VOH - Budgeted VOH @ actual hrs = 78k - 10×7,500 = 78k-75k = *$3,000 U*  

Check: Total OH var = 245k - 30×7,800 = 245k-234k = $11,000 U = 10k+4k-3k

*A3. Sales Variances*  

Q8. Sales Price = Actual units×(AP-SP) = 5,500×(38-40) = *$11,000 U*  

Q9. Sales Volume = Std CM/unit × (Actual units - Budgeted units). Need CM. If CM = $40-$25=$15: 15×500 = *$7,500 F*  

Q10. Sales mix = Std CM × (Actual units×Actual mix% - Actual units×Budgeted mix%). Sales quantity = Std CM × (Actual units total - Budgeted units total) × Budgeted mix%. _CMA tests concept: mix = product proportion, quantity = total market size_

*A4. Material Mix + Yield*  

Std input for 3,600 units = 3,600×5 = 18,000 kg. Std mix: A 60% = 10,800kg, B 40% = 7,200kg  

Avg std price = 0.6×4 + 0.4×6 = $4.80/kg  

Q11. Mix = (AQ at actual mix - AQ at std mix) × Std price  

A: (11,000-10,800)×4 = $800 U. B: (7,500-7,200)×6 = $1,800 U. Total *$2,600 U*  

Q12. Yield = (Total AQ - Std Q for output) × Avg std price = (18,500-18,000)×4.80 = *$2,400 U*  

Q13. Total MCV = Price + Qty = [11k×0.1 + 7.5k×(-0.2)] + 2,600+2,400 = 1,100-1,500+5,000 = *$4,600 U*

*A5. OH 4-Variance*  

Std hrs for output = 9,500×1 = 9,500 hrs  

Q14. VOH Spending = 78k - 8×10,200 = 78k-81,600 = *$3,600 F*  

VOH Efficiency = 8×(10,200-9,500) = *$5,600 U*  

Q15. FOH Budget = 125k - 12×10,000 = 125k-120k = *$5,000 U*  

FOH Volume = 12×(10,000-9,500) = *$6,000 U* = idle capacity  

Q16. *Unfavorable volume var* = Under-utilized capacity. Produced less than denominator level. Fixed cost per unit went up.

*CMA Exam Tips for Variances:*

1. Price/Rate variance uses _actual qty/hours purchased/used_

2. Qty/Efficiency uses _standard price/rate_ 

3. Volume variance only for Fixed OH → measures capacity utilization

4. F = favorable = lower cost/higher revenue than std. U = opposite

Here are *case-based budgetary control Qs* for US CMA Part 1 + ACCA FMA/MA. 👇

*Part A: 6 Cases with Questions*

*Case 1: Master Budget Flow*  

Alpha Co Q1: Budgeted sales 5,000 units @ $50. 40% cash sales, 60% on credit collected 50% next month, 50% 2nd month. Opening AR $30,000.  

Q1. Cash collections from credit sales in Jan?  

Q2. If Dec sales were 4,000 units, total Jan cash collection?  

Q3. Which budget is prepared first in master budget?

*Case 2: Flexible Budget + Variance*  

Beta Co budgeted 8,000 units. Actual 10,000 units.  

Budgeted cost: DM $8/unit var, DL $6/unit var, VOH $4/unit var, Fixed OH $60,000  

Actual cost: DM $85,000, DL $58,000, VOH $43,000, FOH $62,000  

Q4. What is a flexible budget?  

Q5. VOH spending variance using flexible budget?  

Q6. Fixed OH volume variance? Why?

*Case 3: Production + Purchases Budget*  

Gamma wants ending FG = 20% of next month sales. Jan sales 6,000 units, Feb 8,000 units, Mar 7,000 units. Jan 1 FG inventory 1,000 units.  

Q7. Jan production units?  

Q8. If each unit needs 3kg RM, RM ending inventory = 10% of next month usage, RM price $5/kg. Feb RM purchases $?  

*Case 4: Cash Budget*  

Delta: Opening cash $10,000. Min cash balance $15,000. Jan receipts $80,000, payments $90,000. Can borrow in $5,000 multiples @ 1% monthly interest.  

Q9. Cash surplus/deficit before borrowing?  

Q10. Amount to borrow + ending cash balance?  

Q11. Why is cash budget prepared last?

*Case 5: Behavioral Aspects + Budget Types*  

Epsilon uses “use it or lose it” budget policy + budgetary slack.  

Q12. What problem does “use it or lose it” cause?  

Q13. What is budgetary slack?  

Q14. Which budget type helps reduce slack: zero-based or incremental? Why?

*Case 6: ACCA FMA - Budgetary Control Process*  

Zeta sets annual budget, compares actual vs budget monthly, investigates variances >10%.  

Q15. Name 4 steps in budgetary control process  

Q16. What type of control is budgetary control? Feedforward/Concurrent/Feedback?  

Q17. If actual sales < budget due to recession, should manager be blamed? Which variance?

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*Part B: Answer Key + Workings*

*A1. Master Budget Flow*  

Q1. Jan credit sales = 5,000×60%×50 = $150,000. Collected in Jan = 0, since 50% next month. *$0*  

Q2. Jan cash = Cash sales 5,000×40%×50 = $100,000 + Collection from Dec 4,000×60%×50%×50 = $60,000 + Collection from Nov = 0 = *$160,000* + Opening AR $30k if from Nov  

Q3. *Sales budget* is first. All other budgets depend on sales.

*A2. Flexible Budget*  

Q4. *Flexible budget* = budget adjusted for actual activity level. Used for variance analysis vs actual. Static budget stays at planned level.  

Q5. VOH flexible budget = 10,000×4 = $40,000. Actual $43,000 → *$3,000 U spending variance*  

Q6. *Fixed OH volume variance* = Budgeted FOH - Applied FOH = 60,000 - 60,000×10k/8k = 60k-75k = *$15,000 F*. Happens because more units absorbed fixed cost. CMA: only FOH has volume var.

*A3. Production + Purchases*  

Q7. Feb sales 8,000 → Desired ending FG = 20%×8,000 = 1,600. Production = Sales + Ending - Beginning = 6,000 + 1,600 - 1,000 = *6,600 units*  

Q8. Feb production for Mar sales: Mar 7,000 → FG end = 1,400. Production = 8,000+1,400-1,600=7,800 units. RM usage = 7,800×3=23,400kg. RM end = 10%×23,400=2,340kg. RM beg for Feb = 10%×Feb usage 8,000×3=24,000 → 2,400kg. Purchases = 23,400+2,340-2,400=23,340kg × $5 = *$116,700*

*A4. Cash Budget*  

Q9. Ending cash before borrowing = 10k+80k-90k = *$0*. Deficit = 0-15k = *$15,000 deficit*  

Q10. Borrow in $5k multiples → borrow *$15,000*. Ending cash = 0+15k = *$15,000*  

Q11. *Cash budget last* because it needs data from sales, production, purchases, expense budgets. It’s the “summary” budget.

*A5. Behavioral*  

Q12. *“Use it or lose it”* causes overspending at year-end to avoid budget cuts next year.  

Q13. *Budgetary slack* = intentionally underestimating revenue/overestimating costs to make targets easy.  

Q14. *Zero-based budgeting ZBB* reduces slack because every cost must be justified each year. Incremental just adds % to last year = carries slack forward.

*A6. Budgetary Control Process ACCA*  

Q15. *4 steps*: 1. Set objectives/budget 2. Record actual results 3. Compare actual vs budget 4. Investigate + corrective action  

Q16. *Feedback control* – compares actual after event occurred. Feedforward = before, concurrent = during.  

Q17. *No*, recession is uncontrollable/external. Should exclude “sales volume variance” when evaluating manager. Use controllable variance only.

*CMA/ACCA Exam Tips:*

1. Flexible budget = actual units × std cost. Static budget = planned units × std cost

2. Volume variance = only for fixed costs. Measures capacity use, not efficiency

3. Cash budget order: receipts → payments → borrowing/repayment

4. Budgetary control is not about blaming. CMA/ACCA test “controllable vs uncontrollable” variances

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