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October 13, 2015 at 2:24 pm
The efficiency i can understand
October 13, 2015 at 2:21 pm
Just to be clear, is the only time we classify more hours worked and its accompanying higher value as favorable is during volume and capacity variance?
John Moffat says
October 13, 2015 at 5:08 pm
Thats correct (although I do hope you understood the logic as I explained it 🙂 )
July 31, 2014 at 10:41 am
how could the Capacity variance is favorable we budgeted 43,500 hrs whereas we actually worked 44100 hrs this would increase our cost also
July 31, 2014 at 11:21 am
Remember that total fixed overheads should not (by definition) be affected by the number of units produced (or the number of hours worked), and with marginal costing there is no volume (split into capacity and efficiency) fixed overhead variance (as you will see in the next example).
The problem when we are using absorption costing is that fixed overheads have been absorbed as part of the cost card – the budgeted total has been absorbed on the budgeted hours. The standard profit is based on this budgeted unit cost.
If we have more hours available than budget then we are capable of making more units. This means that the fixed overheads per unit will be lower, which results in more profit. That is why the variance is favourable.
May 23, 2014 at 1:27 pm
For Exam sake, can we assume that anything on which fixed overheads (costing) is dependant, we need to assume that it is limited?
May 23, 2014 at 2:18 pm
No. If you are asked for fixed overhead and capacity variances, then you calculate them as in the lecture (which is effectively assuming that labour is limited).
May 28, 2014 at 9:43 pm
Got it. Thanks for your reply and also for your help..cleared F2 with 80% with just less than 35 days of preparation, all I did was went thru text, listened to ur lectures n practised every question in ur lecture notes. Keep up the great work 🙂
May 29, 2014 at 3:54 am
That’s great – congratulations 🙂
March 17, 2014 at 5:06 am
Why do we assume limited amount for labor?
March 17, 2014 at 8:46 am
In practice it could be several different things. However in the exam we assume labour is limited (and it is only relevant for fixed overhead variances when using absorption costing)
March 17, 2014 at 6:02 pm
March 17, 2014 at 6:04 pm
You are welcome 🙂
January 27, 2013 at 11:48 am
Enjoyed!! Thank you!
December 1, 2012 at 3:49 pm
a lot of noises on the background…….
December 1, 2012 at 1:19 pm
Its good information but too much talking in the lecture!
December 1, 2012 at 2:17 pm
Thats because you are supposed to understand what you are doing and not simply learn rules.
November 30, 2012 at 5:19 am
Watevr the Lecture is Awesome
November 30, 2012 at 5:18 am
how is volume variance 3000 adverse said by you and capacity and efficiency be 3000 favourable(1800 f+ 1200f)
November 18, 2012 at 1:56 pm
You don’t sit in the exam and say ” I dont see the point in doing this “!! Preposterous! LOL!! 🙂
April 15, 2012 at 12:53 pm
CAN U KEEP THE SUBTITLES….:D:D:D:D
January 8, 2012 at 9:04 pm
December 11, 2011 at 7:27 pm
good job. the best lecture on F2
December 9, 2010 at 1:42 pm
Thank you open tuition for giving me the confidence that i need!
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