Budgeted fixed overhead ₹1,20,000 for 20,000 standard hours; actual hours 18,000; actual output deserves 17,000 standard hours; actual fixed overhead ₹1,25,000. Fixed overhead expenditure variance is:
A₹1,000 favourable
B₹6,000 adverse
C₹6,000 favourable
D₹5,000 adverse
Answer & Solution
Correct answer: D. ₹5,000 adverse
1. Fixed overhead expenditure variance = Budgeted − Actual.
2. Substitute: 1,20,000 − 1,25,000 = −5,000.
3. The negative figure indicates adverse expenditure variance.
4. Hence the variance is ₹5,000 adverse.
_Source: ICAI BoS Inter Paper 3, Ch 13 "Standard Costing", §13.5.4 Illus 9_
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