XYZ Ltd provides the following data for a month. Budget:25 working days,20,000 units of output and ₹30,000 fixed overhead. Actual:27 working days,22,000 units and ₹31,000 fixed overhead. Standard time is 1.5 hours per unit, so budgeted hours are 30,000 and the fixed-overhead absorption rate is ₹1 per standard hour (₹1.50 per unit). Actual hours worked are 31,500. Assume budgeted daily capacity is constant. For the capacity-variance question use actual hours minus original budgeted hours, so that this capacity variance includes the calendar effect; the calendar variance is also asked separately as a component, not an additional amount to add to that capacity variance.
Find the fixed-overhead capacity variance using actual hours minus ORIGINAL budgeted hours, including the calendar effect as specified in the passage.
Rs. 1,500 (Favourable)
Using the convention explicitly stated in the passage, capacity variance=(31,500 actual hours−30,000 original budgeted hours)×₹1=₹1,500 favourable. This includes the calendar effect. If calendar variance were separated, revised capacity variance would instead be ₹900 adverse; the two conventions must not be mixed.
Important Questions from Standard costing
- Which one of the following is not correct with reference to standard costing ?
As per the information given below, what is the correct material yield variance ?
Standard input = 100 kg
Standard yield = 90 kg
Standard cost per kg of output = Rs. 20
Actual input = 200 kg
Actual yield = 182 kg
Actual cost per kg of output = Rs. 19
Given the information in the passage, what is the calendar variance for the month?
From given information in the passage, what is the volume variance of XYZ Ltd in given month?
What is the expenditure variance of XYZ Ltd as on given month?
