A Company Has a Total Budgeted Fixed Overhead of £135,000

question 11

Multiple Choice

A company has a total budgeted fixed overhead of £135,000 for the year.
Budgeted production is 15,000 units per year.Each unit takes 45 minutes.
Production and costs are spread evenly throughout the year.Overheads are absorbed on the basis of labour hours.
In one month,1,200 units are made and 800 hours are worked.The overhead cost is £10,000.
Which of the following statements are correct?
(i) The Budgeted Overhead Absorption Rate is £12.00 per hour
(ii) The Overhead Absorption Rate is £12.50
(iii) The Fixed Overhead Expenditure Variance is £1,250 Favourable
(iv) The Fixed Overhead Expenditure Variance is £400 Adverse
(v) The Fixed Overhead Volume Variance is £1,650 Adverse
(vi) The Fixed Overhead Volume Variance is £450 Adverse

• A) (i), (iii) and (vi)
• B) (ii), (iii) and (v)
• C) (i) and (iv) only
• D) None of them are correct

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Definitions:

Challenging

Refers to tasks or goals that are difficult and stimulating, often requiring effort and perseverance to overcome.

Sabbaticals

A sabbatical is a period of paid or unpaid leave granted to an employee, often for study or travel, with the intention of returning to their position.

Withdrawing

involves pulling back or removing oneself from a situation, often as a defensive or coping mechanism.

Stressor

A factor that triggers stress in an individual or system.