Same data: Fixed overhead capacity variance equals:
A₹12,000 favourable
B₹6,000 adverse
C₹12,000 adverse
D₹0
Answer & Solution
Correct answer: C. ₹12,000 adverse
1. Fixed overhead capacity variance = (Actual hours − Budgeted hours) × Standard rate.
2. Substitute: (18,000 − 20,000) × 6 = −2,000 × 6.
3. = −12,000, indicating adverse variance.
4. Hence the variance is ₹12,000 adverse.
_Source: ICAI BoS Inter Paper 3, Ch 13 "Standard Costing", §13.5.4 Illus 9d_
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