30,000 hrs Standard time per unit = 20,000 1.5 hours SH = 22,000 x 1.5 = 33,000 p45 Using unit rate: SRAQ (1) R) 1.5 x 22,000 33,000 ARAQ (5) R) SRSQ (2) R) 1.5 x 21,000 31.500 SRRBQ (3) R) 1.5 x 21,600 32,400 SRBQ (4) R) 1.5 x 20.000 30.000 31,000 BFOH'S 30.000 SR = Budgeted Quantity 20,000 = 1.5 hours RBQ = 20,000 x 2/3 = 21,600 20,000 Units in one hour = 30.000 units SQ = 31,500 - = 21.000 1. SRSH/SRAQ Standard Cost of Standard FOH's = ? 33,000 2. SRAH / SRSQ - Standard Cost of Actual FOH'S = 331,500 3. SRRBH/SRRBQ - Revised Budgeted FOH'S = ? 32,400 4. SRBH/SRBQ-Standard Fixed overheads = 30,000 5. ARAH/ARAQ - Actual Fixed overheads = 31,000 a. FOH efficiency Variance = (1)-(2) = 1,500 (F) b. FOH Capacity Variance = (2) - (3) = 900 (A) c. FOH Calendar Variance = (3) - (4) = 2,400 (F) d. FOH Volume Variance = (1)-(4) = 3,000 (F) e. FOH Budget or expensive Variance = (4) - (5) = 1,000 (A) f. FOH Cost Variance = (1) - (5) = 2,000 (F) Illustration 15 A Co. manufacturing two products operates a standard costing system. The standard OH content of each product in cost center 101 is Product A2.40 (8 direct labour hours @ 30 p. per hour) Product B 1.80 (6 direct labour hours @ 30 p. per hour) The rate of 30 p. per hour is arrived at as follows: Budgeted OH 570 Budgeted Direct labour Hours 1,900 Output of product A 100 units Output of product B 200 units No opening or closing stock Actual direct labour hours worked 2.320 Actual OH incurred 640 (a) you are required to calculate total OH for the month of October (b) Show division into: 1) expenditure 2) Volume 3) efficiency Variances