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Q181 (BPP revision kit)
In a subsequent 4 week period, Birch Co’s actual fixed costs were $3,500. There were 18,000 units produced. The budgeted fixed costs was $3,000 based on budgeted production of 17,500 units. Calculate the fixed production overhead total variance.
A. $440 (A)
B. $525 (A)
C. $500 (F)
D. $500 (A)The answer is A. $440
In which the answer is the (Actual units produced x standard fixed costs per unit) – Actual cost
= (18,000 units x $3,000/17500 units) – $3,500
= $440 (A)I am confused, isn’t this just the fixed overhead expenditure variance? How about the fixed overhead volume variance to get to total fixed overhead variance?
Thank you sir 🙂
No – this is the total fixed overhead variance.
The expenditure variance would be the difference between the actual costs of 3,500 and the budgeted costs of 3,000.
I do suggest you watch my free lectures on variances. The lectures are a complete free course for Paper F5 and cover everything needed to be able to pass the exam well.
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