Skip to content

CA Intermediate · Cost and Management Accounting · Standard Costing

Standard variable overhead is Rs 12 per hour. For actual output, 4,000 standard hours were allowed. Actual hours worked were 4,200 and actual variable overhead was Rs 52,500. What is the variable overhead expenditure variance?

Variable overhead expenditure variance compares standard overhead for actual hours worked with actual overhead. 4,200 hours at Rs 12 is Rs 50,400, while actual was Rs 52,500, so the variance is Rs 2,100 adverse.

  1. ARs 2,100 ACorrect
  2. BRs 2,400 A
  3. CRs 4,500 A
  4. DRs 2,100 F

Explanation

Expenditure variance = standard overhead for actual hours - actual overhead = 4,200 x 12 - 52,500 = 50,400 - 52,500 = Rs 2,100 A. Efficiency variance = (4,000 - 4,200) x 12 = Rs 2,400 A. Total = Rs 4,500 A.

Did you get it right without looking?

One question tells you little. A timed set on Standard Costing shows your real accuracy, how long you take and where you lose marks.

Practise Standard CostingFree diagnostic mock

More Standard Costing questions