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CA Intermediate · Cost and Management Accounting · Standard Costing

In Ganga Foods, budgeted fixed overhead was Rs 3,00,000 for 10,000 units. Actual output was 9,000 units and actual fixed overhead was Rs 3,10,000. What is the fixed overhead expenditure variance?

Fixed overhead expenditure variance is Rs 10,000 Adverse. It is the budgeted fixed overhead of Rs 3,00,000 minus the actual Rs 3,10,000, ignoring output level, which affects only the volume variance.

  1. ARs 10,000 AdverseCorrect
  2. BRs 40,000 Adverse
  3. CRs 30,000 Adverse
  4. DRs 20,000 Adverse

Explanation

Expenditure variance = Budgeted fixed overhead - Actual fixed overhead = 3,00,000 - 3,10,000 = Rs 10,000 Adverse. The Rs 40,000 figure is the total variance (absorbed 2,70,000 vs actual 3,10,000), which mixes in the volume variance of Rs 30,000.

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