The fixed overhead price variance, Cost Accounting

DEF Municipality uses a standard absorption costing system to control the cost of one of its services, namely the supply of water to its constituents. The fixed budget for the reticulation process show a budgeted total overhead cost of R2,000,000 per period when 50,000 kiloliters of water is distributed, and R2,640,000 per period when 90,000 kiloliters is distributed.

In period 9 when the distribution was 65,000 kiloliters, total real  overhead was R2,450,000 (R1,250,000 fixed and R1,200,000 variable). The standard fixed overhead absorption rate is R24 per kiloliter.


a)            Using the high-low meathod, determine the following:

(i)            The budgeted variable overhead per kiloliter

(ii)           The budgeted fixed overhead per kiloliter


b)            Determine the following:

(i)            The total fixed overhead absorbed in period 9

(ii)           The fixed overhead price variance

(iii)          The fixed overhead volume variance


Posted Date: 3/19/2013 6:25:08 AM | Location : United States

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