CMA Final · Strategic Cost Management · Variance Analyses
Lakshmi Plastics budgeted fixed overhead of Rs 6,00,000 for 20,000 units (standard 2 hours per unit; budgeted 40,000 hours). Actual output was 19,000 units, actual hours 39,000, actual fixed overhead Rs 6,10,000. What is the fixed overhead volume variance?
The fixed overhead volume variance is Rs 30,000 Adverse. Absorbed overhead on 19,000 units at Rs 30 per unit is Rs 5,70,000, against budgeted Rs 6,00,000, so Rs 30,000 is under-absorbed due to lower volume.
- ARs 30,000 AdverseCorrect
- BRs 10,000 Adverse
- CRs 40,000 Adverse
- DRs 15,000 Adverse
Explanation
Absorbed overhead = 19,000 x Rs 30 = Rs 5,70,000 (rate Rs 15 per hour x 2 hours). Budgeted Rs 6,00,000. Volume variance = 5,70,000 - 6,00,000 = Rs 30,000 Adverse. Rs 40,000 adds the expenditure variance of Rs 10,000, which is wrong here.
Did you get it right without looking?
One question tells you little. A timed set on Variance Analyses shows your real accuracy, how long you take and where you lose marks.
More Variance Analyses questions
- Sundaram Chemicals uses a standard mix for one batch: Material A 60 kg at Rs 20 per kg and Material B 40 kg at Rs 30 per kg (standard output…
- Kaveri Components Ltd. has a standard of 4 labour hours per unit at Rs 120 per hour. In a month it produced 2,500 units. Actual hours paid w…
- Budgeted sales were 1,000 units at Rs 200 with standard cost Rs 140 per unit. Actual sales were 1,100 units at Rs 195. What is the sales mar…
- A firm sets standard variable overhead at Rs 8 per machine hour. For 3,000 units, standard is 2 machine hours per unit. Actual output was 3,…
- Rohan Chemicals uses a standard mix of 60 kg of A at Rs 20 per kg and 40 kg of B at Rs 30 per kg to yield 90 kg of output. Actual input for …
- Standard for a product is 4 labour hours at Rs 90 per hour. For 500 units, 2,100 hours were paid, of which 50 hours were idle, and actual wa…