I need some help on this problem. Would like the problem worked out or an exampl

Question

I need some help on this problem. Would like the problem worked out or an example. The bok I'm using is not very helpful. Thanks

Fixed Overhead Spending and Volume Variances, Columnar and Formula Approaches

Required:

1. Using the columnar approach, calculate the fixed overhead spending and efficiency variances.

2. Using the formula approach, calculate the fixed overhead spending variance.

3. Using the formula approach, calculate the fixed overhead efficiency variance.

4. Calculate the total fixed overhead variance.

Spending variance $ SelectFavorableUnfavorableNo varianceItem 2 Efficiency variance $ SelectFavorableUnfavorableNo varianceItem 4

Explanation / Answer

Fixed Overhead Spending Varience:- Budgeted Fixed overhead - Actual fixed overhead

Note:- The information regarding "Fixed Overhead as budgeted/Budgeted Fixed Overhead" not given in the question, therefore, it can not be caculated . It is also known as Budget / Expenditure varience.

Fixed Overhead efficiency Varience = Standard Rate ( Standard Hours - Actual hours)

= 5 ( 56000 - 56200)

   = 1000 (A)

(A) represents Unfavourable.

Total fixed overhead varience = Standard cost - Actual cost

= (56000 * 5) - (56200 * 5.03)

   = 2686 (A)

(A) represents Unfavourable.

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