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Hi John !
Sir, could you check the below statement if it is valid ! To me, does not make sense at all. I found it in our local books.
Fixed Overhead capacity variance
“if the budgeted hours are less than actual hours, the variance will be adverse. This indicates that the labour worked for fewer hours than the originally budgeted hours which thereby decreased the budgeted capacity”Thank you
If you have copied the statement correctly, then it is wrong.
It should read:
If the actual hours worked are less then the budgeted hours, then the capacity variance will be adverse. (The rest of the paragraph is correct).
(I explain the logic behind this in my free lecture on variances)
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