Q.
1

Kruger Corporation has recently implemented a standard cost system. The management has obtained the following information for variance analysis:

A. Standard cost information:

Direct materials = Rs. 5 per kg.
Quantity allowed per unit = 100 kg per unit
Direct labour rate = Rs. 20 per hour
Hours allowed per unit = 2 hour per unit
Fixed overhead budget = Rs. 12,000 per month
Normal level of production = 1,200 units
Fixed overhead application rate = Rs. 10 per unit
Variable overhead applicable rate = Rs. 2 per unit
Total overhead applicable rate = Rs. 12 per unit

 

B. Actual cost information:

Cost of material purchased and consumed = Rs. 4,68,000
Quantity of material purchased & consumed = Rs. 1,04,00 kg
Cost of direct labour = Rs. 46,480
Hours of direct labour = 2240 Hrs.
Cost of variable overhead = Rs. 2,352
Cost of fixed overhead = Rs. 12,850
Volume of production = 1000 units

 

Q. What is the overhead volume variance?

  • A

    Rs. 4,600 favorable

     

     

     

  • B

    Rs. 2,200 unfavorable

  • C

    Rs. 4,000 unfavorable

  • D

    Rs. 2,000 unfavorable