CA Inter P4 · Chapter 12 · Question 8 of 10
Budgeted fixed overheads are ₹4,80,000 for a budgeted output of 24,000 units. Actual fixed overheads incurred were ₹4,95,000 and actual output was 22,500 units. The fixed overhead cost variance, and its split into expenditure and volume variances, is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) ₹45,000 (A), being expenditure ₹15,000 (A) and volume ₹30,000 (A)
Explanation
Standard rate = ₹4,80,000 / 24,000 = ₹20 per unit. Overheads absorbed = 22,500 x ₹20 = ₹4,50,000. Cost variance = absorbed - actual = ₹4,50,000 - ₹4,95,000 = -₹45,000, i.e. ₹45,000 Adverse. Expenditure variance = budgeted - actual = ₹4,80,000 - ₹4,95,000 = ₹15,000 Adverse. Volume variance = absorbed - budgeted = ₹4,50,000 - ₹4,80,000 = ₹30,000 Adverse. Check: 15,000 + 30,000 = 45,000.
More Standard Costing MCQs
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