Budgeted number of units = 70000 × 80 %
= 56000units
Fixed overhead applied =
57960÷25200 = 2.3
Budgeted labour hours to produce 1 unit = 25200/56000 = 0.45
= 53000 × 0.45 = 23850
1.Fixed overhead applied = 23850 × 2.3 = 54855
Normal capacity hours = 25200
Standard hours allowed for actual production = 23850
1.Volume variance = (25200 - 23850 ) × 2.3 = 3105 unfavourable
Actual overhead incurred = 386000
Fixed expenses budgeted = 57960
Actual variable expenses = 328040
Variable expenses for standard hours allowed = 23850 × 12.8
= 305280
2.Controllable variance = 328040 - 305280
= 22760 unfavourable
3. Sales price variance = (AP-BP) actual volume
= 1000 - 950 =50 × 600 = 30000 Favourable
Sales volume variance = (actual volume - budget volume) × BP
= 600 - 650 = -50 × 950 = - 47500 unfavourable
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