Standard Costing Question & Answer For Overhead Variance,Fixed Production Overhead Volume Variance, Capacity Variance And Productivity Variance

September 20th, 2007 Comments off
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   Actual data of Company A’s Cost Department for month of June’07:

Number of units produced

180

Overhead costs

$19,400

Hours worked

4,050

Number of working days

20

 

   Company A’s Budget & Standard Costing figures

Standard hours per unit

20

Standard overhead rate per hour

$6.25

Standard fixed overhead rate per hour

$4.00

Budgeted hours per month

4,000

Budgeted working days per month

20

 

Question:

 

Compute the:

 

(a)    “Overhead” variance

(b)   Fixed production overhead volume variance

(c)    Capacity variance

(d)   Productivity variance

 

 

 

Answer to above Question:

 

 

(a)Overhead variance:

=(SHP x OAR) less Actual cost

=[(180units x 20 hours) x $6.25]-$19,400

=(3,600 hours x $6.25)-$19,400

=$22,500-$19,400

=$3,100(F)

 

(b) Fixed production overhead volume variance:

=(Budgeted standard hour less SHP) x Fixed OAR

=(4,000-3,600) x $4.00

=400 x $4.00

=$1,600(A)

 

© Capacity variance:

=(Hours worked less Budgeted standard hours) x Fixed OAR

= (4,050-4,000) x$4.00

=50 x $4.00

=$200(F)

 

(e)Fixed cost productivity variance:

=(Hours worked less SHP) x $4.00

=(4,050-3,600) x $4.00

=450 x $4.00

=$1,800(A)

   

 

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