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j62 2. Overbead expenditure variance: Actual overheads incurred - Budgeted overheads at standard hours) - (490,000 - 4,20,000) - 370,000 (adverse) Budgeted overheads: Fixed overheads
j62 2. Overbead expenditure variance: Actual overheads incurred - Budgeted overheads at standard hours) - (490,000 - 4,20,000) - 370,000 (adverse) Budgeted overheads: Fixed overheads 83,00,000 Plus variable overheads (6,000 standard hours x 220, SVOR per hour) 1,20,000 4,20,000 3. Overhead volume variance (Normal capacity in hours - Standard hours) X SFOR per hour (5,000 hours - 6,000 hours) x 260 - 260,000 (favourable) 4. Overhead calendar wariance (Budgeted working days - Actual working days) X SFOR per day - (25-27) X 212,000, that is, (3,00,000 + 25 days) - 24,000 (favourable) 5. Overhead capacity tariance (Normal capacity in hours on the basis of actual working days - Actual hours used) X SFOR per hour - (200 hours per day X 27 - 5,400 hours -6,100 hours) x 260 - $12,000 (favourable) 6. Overhead efficiency exrtance: (SH - AH) X SOR per hour - (6,000 hours -6,100 hours) X 60 - 26,000 (adverse) P. 19.23 A chemical company produces a chemical which has a standard cost per 50 litres as follows: Material 15 litres of A a 20 2300 35 litres of B @ 2.5 87.50 Labour 2 hours @ 120 40 Factory overhead Variable, 2 hours @ 275 150 Fixed, 2 hours a 50 677.50 100 Actual results for the current year are as follows: Production completed 5,00,000 litres Direct labour-hours 21,000 a 322 per hour Material usage 1.60,000 litres of A & 320 per litre and 3.60,000 litres of B & 125 per litre Variable factory overhead : 16,50,000 Fixed factory overhead 13,00,000 Normal capacity 25,000 direct labour-hours Inventory data: Opening: 25,000 litres, 100 per cent complete as to materials and 50 per cent complete as to labour and overheads. Closing: 40,000 litres, 100 per cent complete as to materials, and 50 per cent complete as to labour and overheads. Determine and analyse the following: (1) Material cost variances (2) Labour cost variances (3) Overhead cost variances
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