# Variance Analysis Example 2 continued Fixed Overheads

1. says

Dear Sir,
In this chapter, when you are making the operating statements, you divide the fixed overheads variances into expenditure variance, capacity variance and efficiency variance. Now when I review this lecture again, I could get the capacity variance \$1800(F). Can you help me?

• says

For the capacity variance you take the difference between the actual hours worked and the originally budgeted hours. You multiply the difference by the standard fixed overheads per hour.

If actual hours are more than budgeted hours then the variance is favourable; if less then it is adverse.

• says

Yeah, I got it when I re-watched your video, thank you vey much!!!

2. says

In relation to the controversy on the variation of the fixed overheads as against the fixed budgeted which we know it ought not to change as a fixed overheads, the can I say it is a semi-fixed overheads and not fixed overheads? since the unit cost is fixed (\$3000/200units=\$15) but the total cost changed?

Thus in the short run it was fixed cost in nature (budgeted) but in the long run fixed costs normally becomes semi-fixed

3. says

Hi,

Can you please explain this question??
A company has recorded the following variances for a period:
\$ Sales volume variance – 10,000 – adverse
Sales price variance – 5,000 – favourable
Total cost variance – 12,000 – adverse
Standard profit on actual sales for the period was \$120,000.

What was the fixed budget profit for the period?

\$130,000

\$137,000

\$103,000

\$110,000

Thanks

4. says

great job,but where are the lectures for the new materials for f2 edition of syllabus,eg.index numbers etc.

• says

@gakololang, We will add lectures when we have the time – in the meantime study from the notes and your own books.