Page 388 - F2 - MA Integrated Workbook STUDENT 2018-19

Chapter 15

Test your understanding 8

PQ operates a standard costing system for its only product. The standard
cost card is as follows:

Direct materials (4 kg at $2 per kg) $8.00

Direct labour (4 hours at $4 per hour) $16.00

Variable overhead (4 hours at $3 per hour) $12.00

Fixed overhead (4 hours at $5 per hour) $20.00

Fixed overhead costs are budgeted at $120,000 per annum arising at a
constant rate during the year.

Budgeted monthly production is 500 units. Actual production during period 3
was 600 units, with actual fixed overhead costs incurred being $9,800 and
actual hours worked being 1,970.

Calculate the following variances:

Variance $ A F

Fixed overhead expenditure

Fixed overhead volume

Fixed overhead efficiency

Fixed overhead capacity

Illustrations and further practice

Now try TYU question 8 from Chapter 15.

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