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:

2200 (F) 200 (F) 50 (F) 200 (A) 2200 (A) ABCDE

Transcribed Image Text:

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