Alpha Limited uses Standard Costing System for manufacturing its single product 'STAR'. The following data has been gathered from the cost records…

CA Intermediate · Cost and Management Accounting · PYQS · May 2026
Alpha Limited uses Standard Costing System for manufacturing its single product 'STAR'. The following data has been gathered from the cost records of the company to compute various fixed overhead variances for a specific period: Number of budgeted working days 25 Budgeted man-hours per day 12,000 Output (budgeted) per man-hour (in units) 1 Fixed overhead cost as budgeted 6,00,000 Actual number of working days 28 Actual man-hours per day 12,500 Actual output per man-hour (in units) 0.9 Actual fixed overhead incurred 6,24,000 You are required to ascertain the following: (i) Fixed Overhead Expenditure Variance (ii) Fixed Overhead Volume Variance (iii) Fixed Overhead Calendar Variance (iv) Fixed Overhead Cost Variance (Indicate the nature of variance Favourable (F) or Adverse (A))

Suggested Answer and Working Notes:

(b) Particulars Budget Actual Days 25 28 Man hours per day 12,000 12,500 Hours 3,00,000 3,50,000 Units per man hour 1 0.9 Units 3,00,000 3,15,000 Fixed Overheads (₹) 6,00,000 6,24,000 (i) Fixed Overhead Expenditure Variance = Budgeted Fixed Overhead - Actual Fixed Overhead = (6,00,000 - 6,24,000) = 24,000 (A) (ii) Fixed Overhead Volume Variance = Absorbed Overhead – Budgeted Overhead = (2x 3,15,000) - 6,00,000 = 30,000 (F) (iii) Fixed Overhead Calendar Variance = (Actual Days - Budgeted Days) x Budgeted Rate per day = (28 - 25) x 24,000 = 72,000 (F) (iv) Fixed Overhead Cost Variance = Absorbed Overhead - Actual Fixed Overheads = (2x 3,15,000) - 6,24,000 = 6,000 (F)

Topics: Standard Costing

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