So first, you need to work out your standard costs.

36/3 = £12 per standard kg 1.5 x 300 = 450 standard hours 22.5/1.5 = £15 per standard hour

Then just use the calculations to get the variance.

So for materials usage: (300 x 3kg x 12) - (960 x 12) = -720 (adverse) labour rate variance: (1.5 x 300 x £15 ) - 7140 = -390 (adverse) Variable overhead efficiency variance: (10.50 x 450) - (10.5 x 420) = 315 (favourable)

Right, so the overhead volume variance is the difference between the amount of fixed overhead actually applied to produced goods based on production volume, and the amount that was budgeted to be applied to produced goods.

Having only had a quick look at this, I would try: 16,000 / 12800 = 1.25 1.25 x 14,000 = 17500 17500 - 18200 = -700 (adverse)

Let me know if I'm right or wrong though - if wrong I will have another look tonight.

Right, so the overhead volume variance is the difference between the amount of fixed overhead actually applied to produced goods based on production volume, and the amount that was budgeted to be applied to produced goods.

Having only had a quick look at this, I would try: 16,000 / 12800 = 1.25 1.25 x 14,000 = 17500 17500 - 18200 = -700 (adverse)

Let me know if I'm right or wrong though - if wrong I will have another look tonight.

@CornishPixie i checked the answers and they show it as 1500 favorable, do you know how they would have got that?

## Comments

102101So first, you need to work out your standard costs.

36/3 = £12 per standard kg

1.5 x 300 = 450 standard hours

22.5/1.5 = £15 per standard hour

Then just use the calculations to get the variance.

So for materials usage: (300 x 3kg x 12) - (960 x 12) = -720 (adverse)

labour rate variance: (1.5 x 300 x £15 ) - 7140 = -390 (adverse)

Variable overhead efficiency variance: (10.50 x 450) - (10.5 x 420) = 315 (favourable)

101102101450 x 7 = 3150

420 x 7 = 2940

3150 - 2940 = 210 favourable

102102thanks

sophie

101Having only had a quick look at this, I would try:

16,000 / 12800 = 1.25

1.25 x 14,000 = 17500

17500 - 18200 = -700 (adverse)

Let me know if I'm right or wrong though - if wrong I will have another look tonight.

102101It is the actual units x absorption rate - budgeted units x absorption rate.

We know that the absorption rate is 16,000 / 12,800 = £1.25

So that would give us 14,000 x 1.25 (17500) - 12,800 x 1.25 (16,000) = 1500 favourable

102