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1) Which of the following variances would be shown in an operating statement prepared under a standard absorption costing system?
a) Variable overhead expenditure variance
b) Fixed overhead expenditure variance
c) Fixed overhead volume varianceI believe that a and b is included but what means by fixed overhead volume variance?
2) How to calculate fixed overhead volume variance by using the following data?
Budgeted sales and production 5000 units
Actual sales and production 4900 unitsBudgeted fixed overhead $10,000
Actual fixed overhead $6,0001. The fixed overhead volume variance is included if it is absorption costing – it occurs when the production is more of less than budgeted.
(You can not have watched the free lecture on variances where it is explained in detail)2. Again, you should watch the lecture before asking!
Absorption rate = 10,000 / 5,000 = $2 per unit.
Volume variance = (5000 – 4900) x $2 = $200 (adverse)
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