Standard Costing Fixed Overhead Cost Variance: Standard Fixed Overheads for Actual Production – Actual Fixed Overheads. B.
Fixed Overhead Expenditure/Budget Variance: This variance indicates the difference between the budgeted fixed overheads and the actual fixed overhead expenses. If the actual fixed overheads are more than the budgeted fixed overheads, it is an adverse variance as it means overspending as compared to the budgeted amount. On the other hand, if the actual fixed overheads are less than the budgeted fixed overheads, it is a favourable variance. This variance is computed with the help of the following formula. Fixed Overhead Expenditure Variance: Budgeted Fixed Overheads – Actual Fixed Overheads
C] Fixed Overheads Volume Variance: This variance indicates the under/over absorption of fixed overheads due to the difference in the budgeted quantity of production and actual quantity of production. If the actual quantity produced is more than the budgeted one, this variance will be favourable but it will indicate over absorption of fixed overheads. On the other hand, if the actual quantity produced is less than the budgeted one, it indicates adverse variance and there will be under absorption of overheads. The formula for computation of this variance is as shown below: Fixed Overhead Volume Variance: Standard Rate [Budgeted Quantity – Actual Quantity] Reconciliation I = Fixed Overhead Cost Variance = Expenditure Variance + Volume Variance D] Fixed Overhead Efficiency Variance: It is that portion of volume variance which arises due to the difference between the output actually achieved and the output which should have been achieved in the actual hours worked. This variance will be favourable it the actual production is more than the standard production in actual hours. The formula for computation of this variance is as follows: Fixed Overhead Efficiency Variance: Standard Rate [Standard Production – Actual Production] E] Fixed Overhead Capacity Variance: This variance is also that portion of volume variance, which arises due to the difference between the capacity utilization, i.e. the capacity actually utilized and the budgeted capacity. If the capacity utilization is more than the budgeted capacity, the variance is favourable, otherwise it will be adverse. The formula is as follows: Fixed Overheads Capacity Variance: Standard Rate [Standard Quantity – Budgeted Quantity] Reconciliation II = Volume Variance = Efficiency Variance + Capacity Variance F]
Fixed Overhead Revised Capacity Variance: This variance indicates the difference in capacity utilization due to working for more or less number of days than the budgeted one. The computation of this variance is done by using the following formula. Fixed Overhead Revised Capacity Variance = Standard Rate [Standard Quantity – Revised Budgeted Quantity]
G] Fixed Overheads Calendar Variance: This variance indicates the difference between the budgeted quantity of production and actual quantity of production achieved arising due to the difference in the number of days worked and budgeted. The formula for computation of this variance is as follows.
364