Kiyan Parts’ overhead rate was based on estimates of Rs10,000,000 for overhead costs and 20,000 direct labor hours. Kiyan’s standards allow 2 hours of direct labor per unit produced. Production in May was 900 units, and actual overhead incurred in May was Rs975,000. The overhead budgeted for 1,800 standard direct labor hours is Rs880,000 (Rs250,000 fixed and Rs630,000 variable).

Instructions

a. Compute the total, controllable, and volume variances for overhead.

b. What are possible causes of the variances computed in part (a)?