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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Gross profit
is fixed production overhead expenditure and fixed production overhead volume part of the costs of goods sold? so I know when I do the exam if I need to add or minus (due to the variances) from a budgeted gross profit.
You add or subtract depending on whether the variances are favourable or adverse.
This is all explained in my free lectures on variance analysis.
so if I have a budgeted gross profit of 10,000 and I have fixed production overhead expenditure of 2000 favourable and fixed production overhead volume of 1500 adverse. how would I calculate this. would this be included to calculate gross profit or net profit?
You add the favourable variance and subtract the adverse variance.
It would give the gross profit since the are production overheads.