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John Moffat.
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SarahSyed
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The relevance of Absorptional costing & Marginal costing with variances is that:
1) In marginal costing we need to calculate only one fixed overhead variance which is also called expenditure variance and it is calculated as such:
Fixed overhead expenditure variance is the difference between what was actually spent and what was budgeted to be spent.
2) In absorptional costing we need to calculate all fixed overhead variances such as Fixed overhead Expenditure / Volume / Capacity / Efficiency variances.
John Moffat
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Correct. (And of the course the sales volume variance is different depending on whether it is absorption or marginal costing).
SarahSyed
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