Question:

Muabrik Industries is manufacturing Quad Copters. Standard Costing System is implemented there. In order to assign overheads to Quad Copters, the company uses Machine Hours. 3 Standard Machine Hours are required for each product. Standard Fixed Overhead rate used was Rs. 150 per Machine Hour. Standard Variable Overhead Rate was Rs. 68 per Machine Hour. Standard Normal Volume was 125,000 Machine Hours.

The Company recorded the following data for the year 2020:

Production of Quad Copters47,000

Actual Machine Hours:112,000

Actual Variable OverheadRs. 5,500,000

Actual Fixed OverheadRs. 29,800,000

Required:

1. Calculate Variable Overhead Spending and Efficiency Variance.

2. Calculate Fixed Overhead Spending and Volume Variance

3. Work out Total Fixed Overhead Variance

4. Work out Total Variable Overhead Variance