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