pev fixed overhead variances please help

pennie moore

Hi
Im hoping somebody can advise or help me !
Im having problems gettting the fixed overhead volume,capacity and efficiency variances mapped in my head ! just when i think i understand them i go to pot ! I know they are based on hours or units, but getting confused weather to use actual or budgeted units in the formulas if that makes sense ??
Any advice would be great
Pen

definite.studies

Try putting "fixed overhead variance" into the "Search this forum" link on the right. I think you need to be logged in though to get past the spam filters.

118 11kate

Im using the osbourne books and on page 82 it maps out all the variances in a chart (as if they were scales) and I have found this really easy to under stand when something is adverse or favourable and which variance goes with which.

Hope it helps you too!

GOOD LUCK!

Kate x

pennie moore

Thanks Kate
I will go and get myself one, I only have the kaplan one, Im ok with materail and labour , its just them fixed overhead ones ! nightmarish !
Good luck to you to x

Richard

118 11kate wrote: »

Im using the osbourne books and on page 82 it maps out all the variances in a chart (as if they were scales) and I have found this really easy to under stand when something is adverse or favourable and which variance goes with which.

Hope it helps you too!

GOOD LUCK!

Kate x

I totally agree with this advice. I was finding variances really difficult to grasp until I studied the 'scales' in the Osborne books.

JJJ

A Way To Remember Fixed Overhead Volume Variences

A WAY TO REMEMBER FIXED OVERHEAD VOLUME VARIENCES-

VOLUME VARIENCE-
(Silly Bloody Variences)

Standard- Budgeted= Volume

EFFICIENCY VARIENCE-
(Stamped addressed envelope)

Standard-Actual=efficiency

CAPACITY VARIENCE-
(ABC)

Actual-Budgeted=Capacity

jorja1986

JJJ wrote: »

A WAY TO REMEMBER FIXED OVERHEAD VOLUME VARIENCES-

VOLUME VARIENCE-
(Silly Bloody Variences)

Standard- Budgeted= Volume

EFFICIENCY VARIENCE-
(Stamped addressed envelope)

Standard-Actual=efficiency

CAPACITY VARIENCE-
(ABC)

Actual-Budgeted=Capacity

THanks that is even easier than the one I thought of!

pennie moore

Thanks JJJ !
Dont know about everyone else but ill be sooo glad when this exam is over !! not looking forward to it all all, especially after the Dec one !! Still i guess we shall have to wait and see, not long now !

confused!!

Hi, i seem to be stuggling with the usage variances, i dotn know why but just can not get my head round them :001_unsure:

definite.studies

Re: Usage Variance

If you search this forum for material variance then you will find 8 previous threads that give some tips. I contributed to the one below quite recently, which might be of some use, but everyone likes to approach this in their own way...

http://www.aat.org.uk/forums/showthread.php?t=17936

pennie moore

Hi
I was just wondering how you are getting on with the usage variances? and have you cracked them yet ?

sair_19

Hi Pennie,

I had the same problem as you! As everyone has been saying, the osborne scale diagram is really good. I drew out my own version of the diagram (leaving the boxes empty) and photocopied it about 20 times and kept filling all the boxes in until i could do it from memory. It was painful but worth it as i have now never forgotton the variances. I now just picture the diagram and have no problems :001_smile:

Marilyn Tozer

pennie moore wrote: »

Hi
Im hoping somebody can advise or help me !
Im having problems gettting the fixed overhead volume,capacity and efficiency variances mapped in my head ! just when i think i understand them i go to pot ! I know they are based on hours or units, but getting confused weather to use actual or budgeted units in the formulas if that makes sense ??
Any advice would be great
Pen

Hi I learnt them like this: If you remember the lorry name IVECO remember the middle three letters VEC volume, efficiency, capacity, that goes down the side, remember the initials FFA (I have a rude way of remembering them) and then MAM well that should be easy enough, and you have the formula.

V F - M x Overhead absorption rate
E F - A x Overhead absorption rate
C A - M x Overhead absorption rate

That is do your flexed budget first, then use the above, V= volume which is flexed - master x OAR, E = efficiency so it's flexed - Actual x OAR. C = capacity which is Actual - Master x OAR.

Hope this helps and you are now not more confused.

Regards.

Marilyn x

Marilyn Tozer

Dear Pennie

Usage is another formula remember SC - AC x AQ
SQ - AQ x SC

Standard cost minus actual cost x actual quantity
Standard quantity minus actual quantity x standard cost

This is the same for material and labour, the bottom formula is the usage.

Good luck.

Marilyn x

pennie moore

Thanks Mayrilyn, good luck for the exams, i know i need it lol
Pen

pennie moore

Just wanted to say thankyou for everybodys help and good luck to all of those sitting exams this week x