Fixed Overhead Variances

cs_1988

Hi Guys,

Please can someone give me the correct formula's, my book state's two, both give differant answers!!!

Fixed Overhead Expenditure Variance - Differance between Budgeted and Fixed Overeads, the only one i get!!

But can someone please give the formula's to calculate -
Fixed Overhead Volume Variance

Fixed Overhead Capacity Ratio

Fixed Overhead Efficiency Variance

Thanks In Advance
:confused1:

Khurram Taj

Hello,

I have write down all three formulas for fixed overhead variances.

Fixed Overhead Volume Variance =
Standard hours/unit for actual production- Budgeted hours/unit for production x Overhead absorption rate

Fixed Overhead Capacity Ratio =
Actual hours/unit for actual production - Budgeted hours/unit for production x Overhead absorption rate

Fixed Overhead Efficiency Variance =
Standard hours/unit for actual production - actual hours/unit for actual production x Overhead absorption rate

If you have anymore question in this matter then please do not hesitate to ask.

Best regards

Khurram Taj

wolfe

hey

the FIXED OVERHEAD EXPENDITURE VARIANCE formula is:
BUGETED FIXED OVERHEADS - ACTUAL OVERHEADS and not what you have written.

FIXED OVERHEAD VOLUME VARIANCE:(1)IF OVERHEADS ARE ABSORBED ON UNIT BASIS:
(ACTUAL OUTPUT - BUDGETED OUTPUT) OAR/UNIT

(2)IF OVERHEADS ARE ABSORBED ON HOURLY BASIS FOR EXAMPLE LABOUR OR MACHINE HOUR
(STANDARD HOURS FOR ACTUAL OUTPUT- BUDGETED HOURS) OAR/HOUR

FIXED OVERHEAD VOLUME EFFICIENCY VARIANCE:
(STANDARD HOURS FOR ACTUAL OUTPUT-ACTUAL HOURS) OAR/HOUR

FIXED OVERHEAD VOLUME CAPACITY VARIANCE:
(ACTUAL HOURS -BUDEGETED HOURS) OAR/HOUR

cs_1988

Cheers Khurram,

Had a chat with my tutor and it appears i have a text book with a mistake in!! But all sorted, thanks for your help!

Chris

Londina

cs_1988 wrote: »

Cheers Khurram,

Had a chat with my tutor and it appears i have a text book with a mistake in!! But all sorted, thanks for your help!

Chris

may I ask which book is it? just in case mine is incorrect too...

cs_1988

It is the Osbourne book, but apparently they corrected it, and i got one of the very early versions from 2008! The above formula's are right though!