Total fixed overhead variance
Sammys1987
Registered Posts: 57 Epic contributor 🐘
Hi,
Bit of a stupid question, but please can someone tell me how I calculate the total fixed overhead variance. I had this in the exam I failed (got result last fri) and have another retake on Thursday this week. Please could someone advise?
Thanks in advance
Bit of a stupid question, but please can someone tell me how I calculate the total fixed overhead variance. I had this in the exam I failed (got result last fri) and have another retake on Thursday this week. Please could someone advise?
Thanks in advance
0
Comments

Hi Sammy
Which variance are you trying to calculate?
I may be wrong but there are 4 different fixed overhead variances:
Expenditure
Volume (which subdivides into the following)
Capacity
Efficiency.
Its not a stupid question, I am revising for Financial Performance at the moment and this is definately the hardest unit by far I have done!
Let me know if I can help any further
Amy0 
I'm doing fin performance, exam tomorrow.
Example:
Budget overheads £600,000
Budget Output 25,000 units
Actual Overheads £650,000
Actual Output 30,000 units
A) Fixed overhead volume variance is £120,000 favourable  Because you're looking at the units produced. You are basing this around your budget figures.
£600,000 divided by your 25,000 budgeted gives you £24 per unit x 30,000 actual units = £720,000 This is the first part of your variance and it is '£120,000' over what you budgeted which is the answer, its favourable as it could have costed £720,000 at that cost.
Fixed overhead expenditure Variance ia £50,000 Adverse is due to the £650,000 being more than what we budgeted (£600,000) which is negative so it is adverse.
So you have made a saving on cost as the actual unit cost wasn't as much BUT as we made more units it meant that the overheads were higher.
I hope this rambling made some sense, its as far as i'm up to anyway.0 
Hi Amy,
Well that's what I thought there was only 4. I know how to calculate all for of them but in my exam taken last month it asked for "total fixed overhead variance. But I can't find it in any books?0 
Hey Sammy you're retaking the exam quite soon!! My training provider doesn't have any exam dates available till next month!! Best of luck anyway xx0

I hate my brain, i did the question, went onto one very similar and forgot what to do _ Now i'm checking my own answers haha0

Thanks James!! That's wat I do in my exams do one answer if I find it easy i doubt myself. MissM4ry I tried to get the soonest exam as its my last exam then I'm qualified, I feel confident and did last time wen I failed but I got into exam and the questions were nothing like the practice papers on AAT, if I fail I fail but I will keep going till I pass!!0

The total variance is the total of the expenditure variance and the volume variance.
Think of the total variance at the top, then split into 2 (volume and expenditure, and then volume split further into capacity and efficiency)
To check you understand it, you should now see that expenditure, capacity and efficiency also add up to the total variance.0 
Ahhh thanks Nicola
I wasnt too sure what the total was either but now you have explained its plain and simple :)
How are your studies going?0 
No probs. On to my next two ACCA exams  the end is getting nearer!0

Wow, you are miles ahead of me then!
How are you finding ACCA? I am hoping doing this after AAT.0
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