Fixed Overhead Variances
Fixed overhead total variance
Actual hours
x Actual rate
xxxxxx
*Flexed budgeted hours x Standard rate
xxxxxx
Fixed overhead spending/expenditure variance
Fixed overhead volume variance
Actual hours x Actual rate
xx
*Flexed budgeted hours x Standard rate xxx
*Original budgeted hours x Standard rate
xx
Original budgeted hours x Standard rate xxx
Fixed overhead capacity variance
*Actual hours x Standard rate
Fixed overhead efficiency variance
xxx
Original budgeted hours x Standard rate xxx
Actual hours x
Standard rate
xxx
*Flexed budgeted hours x Standard rate xxx
When both units of output and hours are given and fixed overheads are absorbed
on the base of direct labour hours.
Fixed Overhead Variances
Fixed overhead total variance
Actual units
x Actual rate
xxxxxx
*Actual units
x Standard rate
xxxxxx
Fixed overhead spending/expenditure variance
Actual units x
Fixed overhead volume variance
Actual rate
xxx
*Actual units
x Standard rate xxx
* Budgeted units x Standard rate
xxx
Budgeted units x Standard rate
xxx
When fixed overheads are absorbed on the base of units of output
Q#1
A trader has budgeted to produce 1000 units in 3000 hours at a budgeted fixed overhead cost
of $60000. During the year he has actually produced 900 units in 2800 hours at actual fixed
overhead cost of $58800. Calculate fixed overhead total, spending, volume, efficiency and
capacity variances.
Q#2:
Budgeted units of output
4500 units
Budgeted fixed overheads
$90000
Actual units of output
4800 units
Actual fixed overheads
$98400
Calculate fixed overhead total, expenditure and volume variances