Thursday, May 20, 2010

BEC-5 Additional Info

Someone sent me an instant message yesterday while I was out.  I then lost the window and hence the messenger name as well as the email address I was suppose to respond to.  I remember the question though, so I'll answer it here.

The mnemonics for BEC-5 relates to the direct labor and direct materials variances.  The mnemonics are  PURE, SAD, and DADS.  PURE are the different variances you'll need to calculate and DADS shows you how to get them.  SAD is what order to subtract.

P = Price variance
U = Usage variance
R = Rate variance
E = Efficiency variance

Standard less Actual = Difference (SAD)

For the SAD mnemonic a positive difference is good and a negative difference is bad (ie standard price is greater than actual means you saved money, hence a positive number is a good variance).

DA = Difference times Actual
DS = Difference times Standard

You line up the PURE and DADS/DADS nmemonics together as such:


For each one you are going to do the SAD mnemonic for the item you are working on and multiply it by either the Actual or Standard (DA vs DS to figure out which).

Price Variance:  [Standard Price less Actual Price = Difference]   Take that Difference and multiply it by the Actual Usage   (P=D x A)

Usage Variance = [Standard Usage less Actual Usage = Difference]  Take that Difference and multiply it by the Standard Price  (U = D x S)

The P & U are the material variances

Rate Variance = [Standard Rate less Actual Rate = Difference]  Take that Difference and multiply it by the Actual Efficiency  (R = D x A)

Efficiency Variance = [Standard Efficiency less Actual Efficiency = Difference]  Take that Difference and multiply it by the Standard Rate

The R & E are the labor variances.

When you line the above up you get:

P = DA
U = DS
R = DA
E = DS

This is a little complicated and confusing.  Once you work through it a couple of times though it makes the direct labor and direct labor variances very easy.  If you have my two page cheat sheet for BEC (  on the bottom left is where I have this part written out.

In the Becker books the above comes from the page just past where they cover the direct variances.  I do not have my books with me, but I believe the above stuff are all in passkeys, so that should help make it easier to find.


  1. Hey Dale!

    I finished the FAR test today. I was some what disappointed. I could not tell if the exam questions from one test booklet to the nest was getter harder or not.

    Also, I did not see a single question on inventory, such as LIFE or FIFO. Is that normal?

    The simulations were hard. I am not sure what I answered is correct or not.

    After I walked out of the exam, I realized that there were mistakes that I made because I was looking to hard into the question.

    A stupid mistake that I made was adjust to fair value for an investment that was accounted for using the "equity method."

    Did you feel the same?

    1. @Tara

      Um,you are disclosing nature and content of the exam, beware.

  2. Also, I do not see any question relating to SIRAGE pension expense.

    It is just overwhelming!

  3. I felt much like you did coming out of FAR. There were topics that I thought they'd hit for sure and then didn't see anything on them. The simulations were brutal. How you are feeling is normal.

  4. @Tara and other posters,

    FIY, reminder:
    "I agree to keep confidential and not disclose in any manner whatsoever, in whole or in part, any information concerning the Uniform CPA Examination questions or content that I acquire as a result of taking the examination. I acknowledge that this information is valuable property belonging to the American Institute of Certified Public Accountants that will be disclosed only to candidates who sit for the Uniform Certified Public Accountant Examination. I understand that any breach of the confidentiality or non-disclosure requirements of the examination may result in expulsion from the examination, disqualification from taking the examination for up to five years from the date of the breach, and voiding of any grades received. I understand that a breach will also constitute an infringement of the copyright of the American Institute of CPAs, which will entitle the AICPA to injunctive relief and may also subject me to additional civil penalties including but not limited to monetary damages and attorneys fees."
    "I hereby attest that I will not divulge the nature or content of any question or answer on this examination to any individual or entity, and I will report to the Board of Examiners any solicitations and disclosures of which I become aware. I will not remove, or attempt to remove, any Uniform CPA Examination materials, notes, or other unauthorized materials from the examination room. I understand that failure to comply with this attestation may result in invalidation of my grades, disqualification from future examinations, and possible civil penalties and liability."

    1. You are about three years late on the post, but I cautioned Tara on it after it happened.