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Variance Analysis

This topic has 1 reply, 2 voices, and was last updated 2 years ago by John Moffat.

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November 24, 2022 at 7:28 am #672378
maximus07
Participant
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In lecture of basic variance. You said that Fixed OH will be not taken as budget in flexed budget instead FOAR x Flexed units in absorption costing.
Can you tell me that same drill will be carried in marginal costing or no?
For example
Fixed budget has fixed cost of 24000 and units 2400. We are finding fixed OH for 2000 units (flexed budget).
Fixed OH in Absorption costing= 20000
Fixed OH in Marginal costing =24000
Am I correct?
November 24, 2022 at 8:37 am #672389
John Moffat
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Yes. With marginal costing we do not absorb the overheads and the only variance is the expenditure variance which is the difference between the budgeted total fixed overheads and the actual total fixed overheads. (And I do actually explain that in my free lectures).
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