Fixed Overhead Production Volume Variance

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This video shows how to calculate the fixed overhead production volume variance.
The fixed overhead production volume variance is the difference between the budgeted amount of fixed overhead and the amount of fixed overhead that was actually applied (allocated).
If the company allocated less overhead than the amount of overhead that was budgeted, then the fixed overhead production volume variance is unfavorable.-
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Опубликовано:

24 сен 2024

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Комментарии : 24

@connorbuban9070 3 года назад

EdSpira is correct. Fixed cost is reverse. The larger amount of hours is favorable, because it does not cost you anymore. It's fixed. For example, you might as well get more work done with the flat rent fee etc. It won't cost you anymore. Of course, the labor/machine hours will cost you, but that is not what he is talking about at the moment. That is figured in the labor analysis, so if you took that into affect here you would be counting it twice.

@smishasuresh 4 года назад

Thank you for your videos. Your videos have been very very helpful to me in understanding the concepts. I have a doubt in this video. If the actual number of units produced were given in the question, the fixed overhead applied would be standard rate multiplied by standard hours allowed for actual output right?

@MrLondon100 Год назад

simple and direct thanks

@Edspira Год назад

You are welcome

@duongchi5516 5 лет назад

what is the difference between Actual overhead and applied overhead?

@reneefongg 4 года назад

Applied Overhead = actual X POHR

@pineappleognam421 4 года назад

actual: "actual money spent" applied: "actual qty" but costed on a predetermined rate

@zakiahibrahim 4 года назад

What about applied fixed overhead = standard hours × standard fixed overhead rate (?) It is the same thing with the formula in this vd?

@reneefongg 4 года назад

i am confused on why my lecturer uses Budgeted Fixed overheard - Actual Fixed Overhead :(

@theophistat.9324 3 года назад

Thank you!!

@Edspira 3 года назад

You're welcome!

@chawsuma1828 4 года назад

I think it's favorable bez we used less amount of hours which means it cost less.🤔🤔🙄# correct me if I am wrong😄😄

@kaizentheory7118 5 лет назад

Is there a video on variable overhead volume variance?

@duongchi5516 5 лет назад

can you please post the PLANNING VARIABLE OVERHEAD please

@rolandorivera5239 5 лет назад

unfavorable why??

@isoamazing2013 5 лет назад

The 7,500 worth of Machine hours is considered Idle Capacity. We have budgeted 97,500 but we only used 90,000 indicating we are short of capacity. These get recognized as costs that further on translate to the customer as someone has to pay for it. Just think of it as unfavourable because we could have used 97,500 machine hours but we only used 90,000.

@rolandorivera5239 5 лет назад

Harm J ok ok, just studyng for the CMA exam, and my first language is spanish so kind of challenging, so whenever im with the fixed overhead variance, and the actual driver is less than budgeted is an unfavorable variance? With Variable Overhead Variance im cool!!! But Thanks for the explanation!!! 🙏🏾

@isoamazing2013 5 лет назад

@@rolandorivera5239 Hey Rolando, you have to try and look at it a bit differently. If you have the capacity to use 97,500 machine hours in your warehouse, if you only used 90,000 machine hours, the 7,500 machine hours that you didn't use is considered a 'waste'. For example, the machine could have broken down multiple times and did not produce as much as it should have. Likewise, if we anticipated a certain number breakdowns and thus came up with 97,500 machine hours, if we were to use 100,000, that means we had less breakdowns. Just using breakdowns as an example but other factors can come into play. If that makes more sense, its just the jist of it

@rolandorivera5239 5 лет назад

Harm J you are the best, last time i took variances was in 2013 for bec exam of the cpa jaja

@isoamazing2013 5 лет назад

@@rolandorivera5239 Hahaha goodluck on the CMA exam! Coming from a second-year student, just learned about variances a couple weeks ago :D