- This topic has 3 replies, 2 voices, and was last updated 7 years ago by
.
- Posts
Dear Sir,
Would you please help me to understand which data to use to calculate the Fixed Overhead Capacity and Efficiency variance in the following?Ex.1 Company A has budgeted to produce 4,000 units in Jan. Actual production was 3,700 units and fixed production overheads $10,300.
Standard fixed overhead cost per unit was 1.5 hours at $2,40 per hour.
5,800 actual production hours were worked.Thank you,
LeoFor the efficiency variance you compare the actual hours worked (5,800) with the standard hours for the actual production (3,700 x 1.5), and cost out at the standard cost per hour ($2.40).
For the capacity variance you compare the actual hours worked (5,800) with the budgeted hours (4,000 x 1.5) and again cost out at the standard cost per hour ($2.40).
This is all explained in my free lectures on variances.
The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.
- The topic ‘Fixed O/H volume variance’ is closed to new replies.