standard costing fixed overhead variances

Solution:

Fixed Overhead Cost Variance= Absorbed Overheads – Actual Overheads

Or

Actual Output X Standard Fixed Overhead rate per unit – Actual Output X Actual Fixed Overhead rate per unit

Standard Fixed Overhead rate per unit = Budgeted Overheads / Budgeted Output

10000/2000= Rs. 5 per unit

Actual Fixed Overhead rate per unit = Actual Overheads/ Actual Output

12000/2100= 5.714

Applying above formula:

Fixed Overhead Cost Variance = 2100 X 5 – 2100 X 5.714 = 1499.4 (Adverse)

Fixed Overhead Expenditure Variance = Budgeted Overhead – Actual Overhead

Or

Budgeted Output X Standard Fixed Overhead rate per unit – Actual Output X Actual Fixed Overhead rate per unit.

Applying above formula:

Fixed Overhead Exp Variance = 2000 X 5 – 2100 X 5.714 = 1999.4 (Adverse)

Fixed Overhead Volume Variance = Absorbed Overheads – Budgeted Overheads

Or

Actual Output X Standard Fixed Overhead rate per unit – Budgeted Output X Standard Fixed Overhead rate per unit

Applying above formula:

Fixed Overhead Volume Variance =  2100 X 5 – 2000 X 5 = 500 (Favourable)

Check: FOHCV= FOHVV+FOHEXPV= 2000 (Adverse)+500 (Favourable)= 1500 (Adverse)

Note:

1. Fixed Overhead Cost Variance & Fixed Overhead Expenditure Variance is in decimals due to approximation.
2. This problem have been solved using Output approach, however other approach is to solve through Hour approach.  This is the reason that actual hours worked 22000 and Std time per unit 10 hrs not used while solving question.