331
Actual cost = Budgeted amount + Unfavourable spending variance
= 2,50,00,000+ 60,00,000 A
= Rs 3,10,00,000
Because fixed overhead spending variance is unfavourable, the amount of
actual costs is higher than the budgeted amount.
(d) Production Volume Variance:
Budgeted variable overhead per unit = Rs 200
Budgeted variable overhead rate = Rs 100 per machine hour
Therefore budgeted machine hours allowed per unit = Rs 200/Rs 100
= 2 machine hours
Formula:
Budgeted fixed overhead
–
Fixed overhead absorbed or allowed for actual
output units
= Rs 2,50,00,000
–
(Rs 25 per machine hour x 2 machine hours per unit x
4,98,000 units)
= Rs 2,50,00,000
–
Rs 2,49,00,000 (absorbed fixed overhead)
= Rs 1,00,000 Adverse
Or
Another formula:
(St hrs for actual production
–
Budgeted hrs) x St. fixed overhead rate per hr
= (2 x 4,98,000)
–
(10,00,000 hrs) x Rs 25
= (9,96,000 hrs
–
10,00,000 hrs) x Rs 25
= Rs 1,00,000 Adverse
Or
Another formula:
(Budgeted production
–
Actual production) x St. fixed overhead rate per unit
Standard fixed overhead rate per unit = Budgeted fixed overhead/Budgeted
units
= Rs 2,50,00,000/5,00,000 units
= Rs 50 per unit
Budgeted units = 2 machine hour needed for 1 unit
In 10,00,000 machine hours, units produced will be
= 10,00,000/2 = 5,00,000 units
Now, applying the formula
(5,00,000 units
–
4,98,000 units) x Rs 50
= 2,000 units x Rs 50 = Rs 1,00,000 Adverse