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Standard costing and variance analysis

Isha Nisha Johar (63 Points)

19 April 2018

how to calculate capacity variance under volume variance

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Divakar (Student CA Final ) (11857 Points)
Replied 20 April 2018

Fixed Overhead Capacity Variance calculates the variation in absorbed fixed production overheads attributable to the change in the number of manufacturing hours (i.e. labor hours or machine hours) as compared to the budget.

The variance can be calculated as follows:

Fixed Overhead Capacity Variance:

= (budgeted production hours - actual production hours) x FOAR*

* Fixed Overhead Absorption Rate / unit of hour...... Post ur question here

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