Fixed overhead cost variances

kelove1

Please can someone help me with the calculations for a question I am stuck on?
I need to calculate the fixed overhead expenditure and the budgeted overhead standard cost card gives me 1.5 hours @£5 per hour with budgeted output of 14,000 units. If this is based on marginal costing how can I calculate the total budgeted fixed overheads with just this hourly rate?

AndrewLeyland

The is no fixed cost. If you produced zero unit that would be zero hours in costs. The variable costs is £7.50 per unit. The only way they would be fixed costs if there was minimum payment for the work load (which you have not mentioned)

kelove1

Sorry this is the question not sure where to start with the fixed cost variances

kelove1

Question

AndrewLeyland

always makes a difference when can see the question. I can see this is about standard costing. I think the answer £105,000 projected 1.5 hours per unit and 14,000 unit means it be 21,000 hours. 21,000 x £5 will be £105,000 but this is answer to question you asked not the answer of the question.

kelove1

Thanks for your help. With a question like this how would you work out the labour rate and efficency variance? Sorry its just confused me with so much information

AndrewLeyland

Hopefully this give you some help working it out. The fixed overhead remember the costs should not change.