Question

Q.2. A Company has made the following data available from its accounting records:
a. F.O.H rate = Estimated F.O.H Rs6,00,000
Estimated Direct Labor Hours 200,000
= Rs.3 per DLH
b. 2/3rd of the above calculate rate is variable cost oriented.
c. C. During the year, the company worked 210,000 Direct Labor Hours and actual factory overhead expenditure were Rs.6, 31,000.
Required:
1. The Spending variance
2. Idle capacity Variance

urgent answer,i really need this i will rate

Answer 1

Idle capacity variance Formula Idle capacity variance = Budgeted allowance based on actual hour worked - (Actual hours worked x standard overhead rate) Budgeted allowance based on actual hours worked Fixed expense budget (1 x 200000) = 200000 Variable expenses (2 x 210000) = 420000 Budgeted allowance based on actual hours worked = 620000 Actual hrs worked at standard rate (21000 x 3) = 630000 Idle capacity variance = Budgeted allowance based on actual hour worked - Actual hours worked x standard overhead rate) Ideal capacity variance would be = 10000 (620000 - 630000) favourable