Teaching UGC NET Mock Test Series 2025 (Paper 1 & 2) Accounting and Auditing Cost and Management Accounting Standard costing
Comprehension Passage
Based on the information given below, answer the questions which follow.
Kruger Corporation has recently implemented a standard cost system. The management has obtained the following information for variance analysis:
(a) Standard cost information:
| Direct materials. | = | Rs. 5 per kg. |
| Quantity allowed per unit | = | 100 kg per unit |
| Direct labour rate | = | Rs. 20 per hour |
| Hours allowed per unit | = | 2 hours per unit |
| Fixed overhead budget | = | Rs. 12,000 per month |
| Normal level of production | = | 1,200 units |
| Fixed overhead application rate | = | Rs. 10 per unit |
| Variable overhead applicable rate | = | Rs. 2 per unit |
| Total overhead applicable rate | = | Rs. 12 per unit |
(b) Actual cost information:
| Cost of material purchased and consumed | = | Rs. 4,68,000 |
| Quantity of material purchased and consumed | = | Rs. 1,04,000 kg |
| Cost of direct labour | = | Rs. 46,480 |
| Hours of direct labour | = | 2240 Hrs. |
| Cost of variable overhead | = | Rs. 2,352 |
| Cost of fixed overhead | = | Rs. 12,850 |
| Volume of production | = | 1000 units |
Obtain the overhead spending variance.
1
Rs. 29,202 unfavourable
2
Rs. 1,202 unfavourable
3
Rs. 1,200 favourable
4
Rs. 15,202 favourable