Assertion: In a standard costing system, the Fixed Overhead Volume Variance is considered a non-financial indicator of capacity utilization rather than a measure of cost control efficiency, as it does not reflect actual cash outflows but rather the under-recovery or over-recovery of fixed costs against a predetermined budget. Reason: Fixed costs such as rent, insurance, and executive salaries remain constant in total regardless of the production volume in the short run; therefore, any variance arising from a change in the number of units produced is merely a mathematical byproduct of the absorption costing method and does not imply that management has failed to control the absolute amount of expenditure.

A manufacturing company has established standard costs for one of its products. The standard quantity of material required per unit is 5 kg at a standard price of ₹4 per kg. During a particular month, the company produced 1,000 units and used 5,500 kg of material at an actual price of ₹5 per kg. In addition, the standard labor time per unit is 2 hours at ₹10 per hour, but actual labor hours worked were 2,200 hours at ₹12 per hour. Which of the following statements are correct regarding variances? 1. Material Price Variance is adverse. 2. Material Usage Variance is adverse. 3. Labour Rate Variance is favourable. 4. Labour Efficiency Variance is adverse. Select the correct answer using the code below:

A company requires 5 kg of raw material for 1 unit of finished product, at a standard price of 400 per kg. It produced 2,000 units and consumed 10,500 kg of raw material, costing 4,095,000. Calculate the Material Usage Variance using the standard mathematical sign convention.