LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

logic behind the FOH variances

kinnary (student) (231 Points)

24 March 2009

what is the logic behind the formulaes of fixed overhead variances in standard costing.i know its not there in our CA books but is given so in CWA books.....if any one know d logic behind those formulae...please explain .....it helps

Reply
Follow
Share

2 Replies

K S JOLLY (CA) (369 Points)
Replied 24 March 2009

Originally posted by :kinnary
"	what is the logic behind the formulaes of fixed overhead variances in standard costing.i know its not there in our CA books but is given so in CWA books.....if any one know d logic behind those formulae...please explain .....it helps	"

Fixed Overhead Variances arises on account of two reasons:

1. Over/Under Expenditure on Fixed Overheads (in comparison to budgeted amounts)

2. Over/Under utilisation of Cost Allocation Base used for absorbing fixed overheads.

Variance on account of Reason 1 is called Fixed Overhead Expenditure Variance.

Variance on account of Reason 2 is called Fixed Overhead Production Volume Variance.

Under / Over utilisation of qty of cost allocation base may further be bifurcated into:

Calendar Variance

Capacity Variance

and

Efficiency Variance.

You may download selected problems on Standard Costing from www.infinityclasses.com for enhancing your knowledge.

MAGESH.G (STUDENT) (195 Points)
Replied 11 November 2009

Originally posted by :K S JOLLY
"	Originally posted by :kinnary " what is the logic behind the formulaes of fixed overhead variances in standard costing.i know its not there in our CA books but is given so in CWA books.....if any one know d logic behind those formulae...please explain .....it helps " Fixed Overhead Variances arises on account of two reasons: 1. Over/Under Expenditure on Fixed Overheads (in comparison to budgeted amounts) 2. Over/Under utilisation of Cost Allocation Base used for absorbing fixed overheads. Variance on account of Reason 1 is called Fixed Overhead Expenditure Variance. Variance on account of Reason 2 is called Fixed Overhead Production Volume Variance. Under / Over utilisation of qty of cost allocation base may further be bifurcated into: Calendar Variance Capacity Variance and Efficiency Variance. You may download selected problems on Standard Costing from www.infinityclasses.com for enhancing your knowledge.	"