Comprehension UGC NET Paper Commerce 25th Dec 2021 Shift 1

The correct answer is (A), (B), (C) only

Key Points

The first statement of passage says – “In 2019, India’s ten largest trading partners were USA, China, UAE, Saudi Arabia, Hong Kong, Iraq, Singapore, Germany, South Korea and Switzerland.“

Therefore, according to the above statement, it is clear that India has significant trading partners from Europe, America and Asia.

The correct answer is (A) and (B) only

Key Points The second statement of the passage says – “In 2018-19, the Foreign Direct Investment (FDI) in India was $64.4 billion with service sector, computer and telecom industry remains leading sectors for FDI inflows.“

The above statement clearly shows that Service Sector and Secondary Sector have significant Foreign Direct Investment (FDI) in India.

The most appropriate correct statement is Indian primary sector is contributing less as compared to other sectors.

Key Points The fourth statement of the passage says – “The service sector makes up 55.6% of GDP and remains the fastest growing sector, while the industrial sector and the agricultural sector employs a majority of the labour force“

From the above statement it is clear that Indian primary sector is contributing less as compared to other sectors.

The correct answer is Fiscal Deficit

Key Points The eight statement of the passage says – “India has a high national debt with 68% of GDP, while its fiscal deficit remained at 3.4% of GDP.“

The ninth statement of the passage says – “However, as per 2019 CAG report, the actual fiscal deficit is 5.85% of GDP.“

It is clear from the above statement that the Comptroller and Auditor General has reported a different estimate than of governments, in terms of Fiscal Deficit

The correct answer is (B) only

Key Points The last statement of the passage says – “India faces high unemployment, rising income inequality and major slump in aggregate demand.”

 Hence, Demographics have been articulated in the passage.

The Eleventh statement of the passage says – “India’s government-owned banks faced mounting bad debt, resulting in low credit growth; simultaneously the NBFC sector has been engulfed in a liquidity crisis.”

Hence, Liquidity has been articulated in the passage.

The sixth statement of passage says “India is the world’s sixth-largest manufacturer, representing 3% of global manufacturing output and employs over 57 million people”

Hence, GDP growth has been articulated in the passage.

It is clear from the above statements that Currency flows has not been articulated in the passage

The correct answer is Rs. 2,000 (Favourable)

Key Points Total Overhead Variance:

• The difference between the standard cost of overhead permitted for the actual output obtained, and the actual overhead cost incurred is known as overhead cost variance.
• In other words, overhead cost variance is the difference between under and over absorption of overheads.

Important Points Standard Rate = 30000 / 20000 = 1.5

 Total Overhead Variance = (Actual Output x Standard Rate) – Actual Overhead

 Total Overhead Variance = (22000 x 1.5) – 31000

 Total Overhead Variance = ₹ 2000 (Favourable)

The Correct Answer is Rs. 1,000 (Adverse)

Key Points Expenditure Overhead Variance

FOSV stands for Fixed Overhead Spending Variance, which is the difference between actual and budgeted manufacturing fixed overhead expenses.

Fixed overhead is often budgeted at the beginning of the year.

This difference is also known as a fixed overhead budget variance or a fixed overhead expenditure variance.

Important Points Expenditure overhead Variance = Budgeted Fixed Overheads – Actual Overheads

 Expenditure overhead Variance = 30000 – 31000

 Expenditure overhead Variance = ₹ 1000 (Adverse)

The correct answer is Rs. 3,000 (Favourable)

Key Points

Volume Variance:

• The difference between the actual amount sold or consumed, and the budgeted amount expected to be sold or consumed, multiplied by the standard price per unit, is referred to as a volume variance.
• This variation is used as a broad indicator of whether a company is producing the expected amount of unit volume.

Important Points 

Volume Variance = Actual Output x Standard Rate – Budgeted fixed Overheads

 Volume Variance = 22000 x 1.5 = 30000

 Volume Variance = 33000 – 30000

 Volume Variance = ₹ 3000 (Favourable)

The correct answer is Rs. 1,500 (Favourable)

Key Points

Capacity Variance:

• Fixed overhead capacity variance is the difference between the number of labour hours planned and the number of labour hours actually worked, resulting in under- or over-absorbed fixed overheads.
• It accounts for the hours that labour could have worked but did not, as well as the hours that labour was overworked.
• This could be due to a labour strike, a labour shortage/labourers working overtime, plant and machinery breakdowns, and so on.

Important Points 

Capacity Variance = Standard Rate = (Revised Budgeted units – Budgeted units)

Capacity Variance = 1 (33000 – 31500)

Capacity Variance = ₹ 1500

The correct answer is Rs. 2,400 (Favourable)

Key Points 

Calendar Variance :

• It is the portion of the volume variance caused by the difference between the number of working days in the budget period and the number of actual working days in the budget period.
• The variance will be favourable if the real working days are greater than the standard working days, and vice versa if the actual working days are less than the standard days.

Important Points 

Calendar Variance = Increase or decrease in production due to more or less working days at the rate of budgeted capacity x Standard rate per unit.

Increase Units in 2 days = 20000 x 2/25 = 1600 units

Calendar Variance = 1600 x 1.5 = ₹ 2400 (Favourable)