Question

10. Standard quantity for material
A is 30kg with a price of Rs 20.
Actual quantity is 44kg with a
price of Rs 25. If actual output is
90 kgs against the standard of
45kgs the standard quantity for
actual output is ? (2)
A. 50 kg
B. 60kg
C. 40kg
D. 35kg
Working Notes:​

Answer 1

Answer:

The answer is B. 60kg

Explanation:

Standard fixed overhead per unit = budgeted fixed overhead cost/ budgeted units of

output = 2400/800 = ` 3

Standard fixed overhead per man hour = budgeted fixed overhead cost/ budgeted man

hours = 2400/4000 = ` 0.6

Standard fixed overhead per day = budgeted fixed overhead cost/ budgeted days =

2400/20 = ` 120

WN 2:

A. Standard Fixed Overhead Cost = Standard fixed overhead per unit × Actual Output

(units) = ` 3 × 900 = ` 2700

B. Fixed Overhead absorbed in actual hours = Standard fixed overhead per hour ×

Actual hours = ` 0.6 × 4200 = ` 2520

C. Fixed Overhead Cost absorbed in actual days = Standard fixed overhead per days

× Actual days = ` 120 × 22 = ` 2640

D. Budgeted Fixed Overhead Cost = ` 2400

E. Actual Fixed Overhead Cost = ` 2500

Computation of Variances:

Fixed Overhead Efficiency Variance = A - B = ` 2700 - ` 2520 = ` 180 (Favourable)

Fixed Overhead Capacity Variance = B - C = ` 2520 - ` 2640 = ` 120 (Adverse)

Fixed Overhead Calendar Variance = C - D = ` 2640 - ` 2400 = ` 240 (Favourable)

Fixed Overhead Volume Variance = A - D = 12700 - ` 2400 = ` 300 (Favourable)

Fixed Overhead Expenditure Variance = D - E = ` 2400 - ` 2500 = ` 100 (Adverse)

Fixed Overhead Efficiency Variance = A - E = ` 2700 - ` 2500 = ` 200 (Favourable)

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