PQ Limited operates a standard costing system for its only product. The standard cost card is as follows:

Fixed overheads are absorbed on the basis of labour hours. Fixed overhead costs are budgeted at £12000 per annum, arising at a constant rate during the year.
Activity in period 3 is budgeted to be 10% of total activity for the year. Actual production during period 3 was 500 units, with actual fixed overhead costs incurred being £9800 and actual hours worked being 1970.
The fixed overhead expenditure variance for period 3 was:Appendix

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Direct material (4 kg at 2/kg) 8.00 Direct labour (4 hours at 4/hour) 16.00 Variable overhead (4 hours at 3/hour) 12.00 Fixed overhead (4 hours at 5/hour) 20.00