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

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:

(b)   Fixed production overhead volume variance

(c)    Capacity variance

(d)   Productivity variance

 (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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