MANAGERIAL ACCOUNTING

QUIZ (ONLINE)

Question No. 1

Explain various variances relating to factory overheads.

(10 Marks)
Question No. 2

Problem 11-35 (Straightforward Overhead Variances)

Calgary Paper Company produces paper for photocopiers. The company has developed standard overhead
rates based on a monthly capacity of 180,000 direct labor hours as follows:

Standard costs per unit (one box of paper):

Variable overhead (2 hours @ Rs. 3 per hour) Rs. 6
Fixed overhead (2 hours @ Rs. 5 per hour) Rs. 10
Total Rs. 16

During April, 90,000 units were scheduled for production: however, only 80,000 units were actually
produced. The following data relate to April.

1. Actual direct labor cost incurred was Rs. 1,567,500 for 165,000 actual hours of work.
2. Actual overhead incurred totaled Rs. 1,371,500, of which Rs. 511,500 was variable and Rs.
860,000 was fixed.

Required: Prepare two exhibits similar to Exhibits 11-6 and 11-8 in the chapter, which show the
following variances. State whether each variance is favorable or unfavorable, where appropriate.

1. Variable overhead spending variance.

2. Variable overhead efficiency variance.
3. Fixed overhead budget variance
4. Fixed overhead volume variance

(20 Marks)