Same data: Fixed overhead volume variance equals:
A₹18,000 adverse
B₹6,000 adverse
C₹18,000 favourable
D₹12,000 favourable
Answer & Solution
Correct answer: A. ₹18,000 adverse
1. Standard fixed overhead rate per hour = 1,20,000 / 20,000 = ₹6.
2. Volume variance = (Actual output's standard hours − Budgeted hours) × rate.
3. Substitute: (17,000 − 20,000) × 6 = −3,000 × 6 = −18,000.
4. The negative figure indicates adverse volume variance of ₹18,000.
_Source: ICAI BoS Inter Paper 3, Ch 13 "Standard Costing", §13.5.4 Illus 9b_
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