Question

A Chemical manufacturing company has budgeted capacity of 10000 direct labor hours per month that is used to calculate predetermined factory overhead rate. At this capacity, company’ budgeted fixed factory overhead is Rs. 75000 with variable overhead rate at Rs. 5 per labor hour. During the month, labor worked for 12000 hours. However, company uses standard cost system and labor work for 3 hours to produce one unit when company operates at standard. Company produces 3000 units during the month. Company’s actual factory overheads are Rs. 230000.
Required: Calculate two factory overhead and three factory overhead variances.
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Answer 1

Answer:

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