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Hi Sir,
There is a question in bpp revision kit to calculate total fixed oh variance
the answer in kit said
actual production units x budgeted fixed cost/unit – total actual fixed oh cost
but i thought it should be
budgeted production units x budgeted fixed cost/unit – total actual fixed oh cost
please guide me if i m wrong .
many thanks
It is obviously absorption costing, and the total fixed overhead variance is as you have stated from the kit. We flex the budget before calculating the total variance (which we can then analyse between the capacity, efficiency, and expenditure variances).
I do suggest that you watch my free lectures on variances (and if necessary the relevant F2 lectures, because this is revision of Paper F2).
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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