Basic Variance Analysis: Please note that this lecture relates to Chapter 13 of the Course Notes and not Chapter 12 as stated in the lecture.
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Very helpful….summative example and really on point! BIG UP.
Can someone help me out here? why are we not absorbing fixed overhead but we are including fixed overhead expenditure in Marginal Costing?
@loopheichuen, The marginal cost means the variable cost – so by definition we do not absorb fixed overheads into the unit cost.
However, fixed overheads still exist and remain an expense and so affect the profit.
Its simply that with marginal costing we subtract the total fixed overheads (and therefore have an expenditure variance if the total is more or less than budget).
With absorption costing the fixed overheads are absorbed and so in addition to the variance due to the total being more or less than the total budgeted, we have the volume variance because if we produce more or less than budget we will have absorbed more or less than we should have.
@johnmoffat, Thank you very much sir! i finally understood.
@loopheichuen, Great
really fantastic explanation, thanks
Am sure i will pass, thank you so much
Great! simple and nice to be learned…
Well explained. Thanks
Thank you very much, was stuck on difference between Absorption and Marginal costing Fixed oh variance and sales.
God bless you.
Dear admin, why is fixed o/h included while calculating operating statement under marginal costing???
Fixed o/h shouldn’t be included…isn’t it???
@s1234, Just to reply your concern. In Marginal, we mention Fixed Overhead Expenditure only, Fixed Overhead Volume is not included. Hope this answers your question.
It is comprehensive. Thank you
very useful lectures but this one(ie part 5 of variance) is not opening
very helpful..gud luck to all…n thnx for lectures…
I wish every one a very good luck, including myself for the F5.
thanks a lot!!!!
Its really useful
Thank you very much
it is very usefull . . . i hope i will pass through
Thanx once more