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John Moffat.
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celineam
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Hello Mr. John,
In my BPP revision kit, 2019-2020 edition, question 24.5,Match the possible explanations of the cause of variances to the variance.
Volume Variance is matched to Over-absorption of fixed overheads
Is that correct?Doesn’t the FIXED OVERHEARD TOTAL VARIANCE calculate under and over absorption of overheads?
John Moffat
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The BPP answer is correct.
The total variance analyses into the expenditure variance and the volume variance. It is the volume variance that is the over or under absorption of fixed overheads. (And the volume variance can be further analysed into the capacity and efficiency variances).
Have you watched my free lectures on variance analysis?
celineam
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