CA Inter P4 · Chapter 12 · Question 7 of 10
Budgeted fixed overheads are ₹4,80,000 for a budgeted output of 24,000 units. Actual output was 22,500 units. The fixed overhead volume variance is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) ₹30,000 (Adverse)
Explanation
Standard fixed overhead rate = ₹4,80,000 / 24,000 = ₹20 per unit. Volume variance = (actual output - budgeted output) x standard rate = (22,500 - 24,000) x ₹20 = -₹30,000, i.e. ₹30,000 Adverse, because output fell short of budget and fixed overheads were under-absorbed.
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