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- March 2, 2015 at 2:24 am #230935
The budgeted fixed production overhead for H Ltd for the year 2012 is $48,000. Budgeted direct labour time for the year was 12,000 hours. The standard labour time for one unit of product was 3 hours.
During the year, the actual production was 3900 units and the actual number of hours worked was 11500 hours. The actual fixed overhead was $50000.
If want to find the total variance the below calculation whether is correct ?
my working:
OAR = $48000 / 12000 hrs = $4/hr x one unit use 3 hrs = $12 per unit ?actual total cost $50000
compare with standard costs with actual production 3900 units x 3 hrs = 11700 hrs x $4=$46800
total variance $3,200 adverse ? ( can call this as over / under absorption ?)Sir, I would like to know the standard cost per unit whether is $12 or $4 ?
I remember in your lecturer variance analysis for calculate total variance use $15 per unit not $3 per hour :
actual total cost 8900 units $134,074
standard cost for actual production 8900 units x $15=$133500
$574 adverseplease correct me the above. Thank you.
March 2, 2015 at 8:45 am #230952The standard cost per hour is $4.
The standard cost per unit is 3 hours x $4 = $12.Your workings are correct, calculating the standard cost for actual production is the same whether you write it the way you have, or if you write 3,900 units x $12.
March 2, 2015 at 1:45 pm #230969hi sir, thank you explanation
another question :
can you please refer above question again, if find the budgeted unit whether below calculation is correct and please explain the reason ?
working : $48,000 / $12per unit = 4000 budgeted unit ?March 2, 2015 at 3:10 pm #230982Yes, that is correct.
You could have got the same result by dividing the budgeted hours of 48,000 by the standard hours per unit (3).
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