Overhead volume varaince stuck ..missing parts
topcat
Trusted RegularRegistered Posts: 452
Hello All,
hope your all enjoying the weekend
if someone gets a second could they help me please?
Thank you
hope your all enjoying the weekend
if someone gets a second could they help me please?
 Budgeted overheads are £1,200,000
 Budgeted output is 30,000 units
 Actual output is 32,500 units
 Actual overheads are £1,198,000
Thank you
0
Comments

Volume variance is can be calculated with either units or hours; if you do it with hours, you do it with the standard hours for the actual ouput rather than the actual hours worked (the actual hours worked come in for efficiency and capacity variances). As the standard hours worked for actual production entails flexing the budget for the units produced, using either will give the same result.
So for your example, it's 32,500  30,000 x OAR (1.2m / 30,000 = 40) = 2,500 x 40 = 100,000F (favourable as more units are produced, therefore more cost must be absorbed).
Price variance is 2,000F.
So your doublecheck is total fixed overhead variance = overheads absorbed by actual production less actual cost = 32,500 x OAR  1,198,000 = 12,000F.0 
brilliant i understand now thank you for taking the time to explain appreciated :001_smile:0