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Why is it that in budgeting,the fixed overheads for the fixed budget and the flexed budget is the same figure despite having different units of production while for variance analysis the figure in the fixed budget differs from that of the flexed budget??..thanks in advance
Fixed overheads, by definition, do not change with the level of production.
In variance analysis, if (and only if) we are using absorption costing, then we look at the profit per unit which is effectively treating the fixed overheads as though they are variable. They obviously are not variable, which is why (with absorption costing) we have a volume variance.
All of this is explained in the free lectures. The lectures are a complete free course for Paper F2 and cover everything needed to be able to pass the exam well.
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