ACCA examiner's comments

This question relates to study guide heading D1(b).

The correct answer is C. In a standard absorption costing system the sales volume margin variance is based upon profit per unit, whereas under a marginal costing system it is based upon contribution per unit. In a standard absorption costing system the total fixed overhead variance includes expenditure and volume variances. Under marginal costing only the expenditure variance is included. Variable cost variances are the same under both systems. Only 15% of candidates selected the correct alternative. The most frequent answers were A (37% of candidates), and B (30% of candidates). This is essentially a knowledge based question, and the poor results suggest that candidates need to do more work in this area.