CAF-5 · Chapter 17 · Question 14 of 20
(Standard Costing: Working Backwards) A company uses standard absorption costing. Budgeted fixed overheads were Rs. 300,000 and budgeted production was 15,000 units. The actual fixed overheads incurred were Rs. 310,000. If the Fixed Production Overhead Volume Variance was Rs. 20,000 Adverse, what was the actual number of units produced?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) 14,000 units
Explanation
Standard OAR = Budgeted Fixed OH / Budgeted Units = 300,000 / 15,000 = Rs. 20 per unit. Volume Variance = (Actual Units - Budgeted Units) * OAR. -20,000 (Adverse) = (Actual Units - 15,000) * 20. -1,000 = Actual Units - 15,000. Actual Units = 14,000.
More Mixed Practice Challenge I MCQs
- Q16(Job Costing & Absorption) A specific job incurs prime costs of Rs. 60,000. It requires 500 direct labour hours in Department A and 300…
- Q17(Labour Costing: Premium Bonus Plan) A factory sets a standard time of 30 minutes to produce one unit. The standard basic wage is Rs. 80…
- Q18(Decision Making: Shut Down) Product Line Z generates sales revenue of Rs. 200,000 and incurs variable costs of Rs. 140,000. It is…
- Q19(Relevant Costing: Special Order Pricing with Spare Capacity Constraints) A factory produces 10,000 units currently (maximum capacity is…
- Q20(Cost Flow & Interlocking Ledgers) In an interlocking cost ledger system, the opening balance of Raw Materials was Rs. 20,000. During the…