Question

JBG Ltd. budgets for fixed overhead of Rs. 24,000 and production of 4,800 units. Actual production is 4,200 units and fixed overhead cost incurred is Rs.
22,000.The fixed volume variance is :

• A. Rs. 3,000 (A)
• B. Rs. 2.000(F)
• C. Rs. 1,000 (A)
• D. Rs. 3,000 (F)

Answer 1

The correct option is A Rs. 3,000 (A)

The Fixed Overhead Volume Variance is the difference between the amount of fixed overheads actually applied to produced goods based on production volume and the amount that was budgeted to be applied to produced goods.

Fixed Overhead Volume Variance = Budgeted FOH on Actual Production-Actual FOH

Budgeted Fixed Overheads Per units= Rs.24000/4800 Units

= Rs.5 per unit

Budgeted Fixed Overheads on Actual Production= Rs.5*4200 Units

= Rs.21000

Fixed Overheads Volume Variance= Rs.21000- Rs.24000

=Rs.3000 (Adverse)