# Standard overhead x actual hours budgeted hours 5 x

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= Standard Overhead x (Actual Hours Budgeted Hours) = 5 x (800 hours 1,200 hours) = Rs 2,000 (A) = Standard Rate of Overhead = Budgeted overheads / Budgeted hours = Rs 6, 000/1, 200 = Rs 5 per hour (5) Overhead Efficiency Variance = Overheads Volume variance Overhead Capacity variance = Rs 1,000 (A) Rs 2,000 (F) = Rs 1,000 (F)

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332 (II) For Variable overhead (a) Variable overhead spending variance: (Budgeted Variable overhead cost Actual Variable overhead) Budgeted variable overhead cost = Actual hrs works x St. Variable overhead rate per hour = 9,60,000 hrs x Rs 100 = Rs 9,60,00,000 Now, applying the formula (Rs 9,60,00,000 Rs 10,08,00,000) = Rs 48,00,000 Adverse Or Another formula: (St. machine hr rate

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• Spring '12
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