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    Question

    In a job order company, factory overheads are allocated

    using machine hours. Actual overhead = ₹5 lakh, standard overhead based on actual hours = ₹6 lakh. What is the overhead variance?
    A ₹1 lakh under-absorbed Correct Answer Incorrect Answer
    B ₹1 lakh over-absorbed Correct Answer Incorrect Answer
    C ₹11 lakh absorbed Correct Answer Incorrect Answer
    D No variance Correct Answer Incorrect Answer

    Solution

    When actual overhead < absorbed overhead, it results in under-absorption. ₹6L (absorbed) – ₹5L (actual) = ₹1L under-absorbed.

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