# Assessment 2 task 3B

paige08x
Posts:

**7**Registered
Hi, I am struggling to work out the total fixed overhead variance on 3B.

How do I do this?

How do I do this?

paige08x
Posts: **7**Registered

Hi, I am struggling to work out the total fixed overhead variance on 3B.

How do I do this?

How do I do this?

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## Comments

77RegisteredThese questions are working backwards, the formula for Expenditure variance is:

Total standard fixed cost-total actul fixed cost=expenditure variance

You have worked out the the standard/budgeted fixed cost in part a as 16,000 already.

16,000-?=2,200 (this figure is given in the question already.

If you want to know the actual fixed overhead cost you re-arrange the formula to:

16,000+2,200=18,200 Sorry cant put a pound sign as my keyboard isnt working.

The total fixed overhead variance is not too difficult as well but I just canot remember right now (trying to prepare for my synoptic assessment) how to work it out. I will try to go through my notes and write back to you tomorrow if its not too late.

Many thanks.

140RegisteredExpenditure you know is £18,200 which against a budgeted £16,000 is £2,200A.

Volume is budgeted units vs actual units - budgeted 12,800 actual 14,000 meaning you produced 1,200 more than budgeted which is favourable.

Your overhead absorption is £16,000 / 12,800 units = £1.25/unit.

1,200F units x £1.25 = £1,500F.

£1,500F - £2,200A = £700A.

Hope this helps.

25RegisteredHow do I do this?

140Registered2.5hrs/unit std, 12,800 units is 32,000 hrs budget.

Actual hours: 33600

Budget hours: 32000

1,600 hours favourable

xOAR/hr £0.50

£800F

The fixed overhead capacity variance focuses on how many hours were worked compared to budget, as hours worked was more than budget it is a favourable variance.

25Registered25Registered140RegisteredFlexed hrs: 14,000 x 2.5hr = 35,000hrs.

Actual hrs: 33,600 hrs

Difference: 1,400F

x OAR/hr: £700F.

To remember fixed overhead effic/capac remember this:

Standard (aka flexed)ActualActualBudget (compare to the original budget, not flexed budget!)SA = efficiency, AB = capacity

Fixed overhead expenditure is always £, fixed overhead volume is always units & fixed overhead efficiency/capacity is always in hours.

25Registered140Registered25Registereddirect labour efficiency

140RegisteredShould have taken 0.5hr/unit x 3,200 so 1,600hrs

Actually took 1,920

320hrs A

x rate/hr (£15000/1500) £10.00

£3,200A

25Registered140Registered7Registered140Registered25Registered140RegisteredUnfortunately I do not, I just worked out the answers as you requested them.

If there's anything I can help with do let me know.

Kind regards

25Registered140Registered1BDo a high-low between the given units to retrieve the variable cost. Plug that back in to get the fixed costs.

Then you need to heed the notice of fixed overheads increase £12,000 if units are greater than 30,000 and the variable costs reduce by £1.00 for units in excess of 25,000.

3A"standard" means flexed. Flexed litres of fuel for 5,000 journeys. Work out budgeted (12,460L / 7,000J) £1.78L/journey x 5,000 so 8,900L for 5,000 journeys. You can work out hours by substituting litres for hours.

Fixed overhead volume variance we covered in post 3 in this thread. Budgeted 7,000 actual 5,000 variance 2,000A journeys OAR = (£140,000 / 7,000) = £20/journey

5A3-month averages you need to do some revision on time series and seasonal variations. Basically you take 3 months, add them together and divide by 3 so (5,760 + 5,820 + 5,760) / 3 = 5,780. Do this moving down so (5,760 + 6,600 + 6,120) / 3 = 6,160.

9AQ9 has been answered by both myself and @N4T here: https://forums.aat.org.uk/discussion/comment/450902#Comment_450902

https://forums.aat.org.uk/discussion/comment/453841/#Comment_453841

I'm conscious of just feeding the answers as you will need to run through the processes. Hopefully I've provided starting points for all questions.

Let me know if I can help any more.

25Registered25Registeredopening inventory month 3

(10000-9000) * 95 =

Is it right ?

25Registered25Registered