period: Budgeted variable overheads = Rs. 8,00,000 Budgeted fixed overheads = 5,00,000 Overheads are recovered on the basis of standard machine hours. The company had budgeted for 1,00,000 machine hours for the year. During the budget period the company used 1,10,000 machine hours while it should have used 95,.000 machine hours for actual output. Actual variable overheads Rs. 8,00,000 Actual fixed overheads Rs. 4,70,000. Calculate the following variances: () Variable overheads cost variance; (i) Variable overheads spending variance; (iii) Variable overheads efficiency variance; %3D
period: Budgeted variable overheads = Rs. 8,00,000 Budgeted fixed overheads = 5,00,000 Overheads are recovered on the basis of standard machine hours. The company had budgeted for 1,00,000 machine hours for the year. During the budget period the company used 1,10,000 machine hours while it should have used 95,.000 machine hours for actual output. Actual variable overheads Rs. 8,00,000 Actual fixed overheads Rs. 4,70,000. Calculate the following variances: () Variable overheads cost variance; (i) Variable overheads spending variance; (iii) Variable overheads efficiency variance; %3D
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter8: Standard Cost Accounting—materials, Labor, And Factory Overhead
Section: Chapter Questions
Problem 14P: Fargo Co. manufactures products in batches of 100 units per batch. The company uses a standard cost...
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:A company using standard costing system presents the following information for the budget
period:
Budgeted variable overheads = Rs. 8,00,000
Budgeted fixed overheads = 5,00,000
Overheads are recovered on the basis of standard machine hours. The company had budgeted for 1,00,000
machine hours for the year.
During the budget period the company used 1,10,000 machine hours while it should have used 95,.000
machine hours for actual output.
%3D
Actual variable overheads Rs. 8,00,000
Actual fixed overheads Rs. 4,70,000.
Calculate the following variances:
() Variable overheads cost variance;
(i) Variable overheads spending variance;
(iii) Variable overheads efficiency variance;
(iv) Fixed overheads cost variance;
(v) Fixed overheads expenditure variance;
(vi) Fixed overheads volume variance;
(vii) Fixed overheads efficiency variance;
(vii) Fixed overheads capacity variance.
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