CA Intermediate · Cost and Management Accounting · Standard Costing
Budgeted fixed overhead is Rs 3,00,000 for 10,000 hours. Actual fixed overhead was Rs 3,20,000, actual hours worked were 9,500, and standard hours for actual output were 9,000. What is the fixed overhead volume variance?
Standard fixed overhead rate is Rs 3,00,000 divided by 10,000 hours, or Rs 30 per hour. Absorbed overhead on 9,000 standard hours is Rs 2,70,000. Against budget of Rs 3,00,000, the volume variance is Rs 30,000 adverse.
- ARs 30,000 ACorrect
- BRs 20,000 A
- CRs 15,000 A
- DRs 50,000 A
Explanation
Standard rate = 3,00,000/10,000 = Rs 30 per hour. Absorbed overhead = 9,000 x 30 = Rs 2,70,000. Volume variance = absorbed - budgeted = 2,70,000 - 3,00,000 = Rs 30,000 A. Expenditure variance is Rs 20,000 A, and total Rs 50,000 A.
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