COST ACCOUNTING
STANDARD COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The total variance is RM35, 000. The total materials variance is RM14, 000. The total labor variance is twice the total overhead variance. What is the total overhead variance?
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RM3, 500
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RM7, 000
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RM10, 500
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RM14, 000
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Explanation:
Detailed explanation-1: -It can be calculated using the following formula: Fixed Overhead Volume Variance = Applied Fixed Overheads – Budgeted Fixed Overhead. Here, Applied Fixed Overheads = Standard Fixed Overheads × Actual Production.
Detailed explanation-2: -It is calculated as (budgeted production hours minus actual production hours) x (fixed overhead absorption rate divided by time unit), Fixed overhead efficiency variance is the difference between absorbed fixed production overheads attributable to the change in the manufacturing efficiency during a period.
Detailed explanation-3: -The total overhead variance is the difference between actual overhead costs and overhead costs applied to work done.
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