Fixed overhead variance (fov), Cost Accounting

Assignment Help:

Fixed Overhead Variance (FOV)

Fixed overhead variance has been described by ICMA, London, as 'the variation between the standard cost of fixed overhead absorbed in the production achieved, whether completed or not, and the actual fixed attributed, overhead and charged to that period'.

FOV = (Actual production x Standard fixed overhead recovery rate) - Actual overheads incurred

This variance may be split up into - i) Fixed Overhead Expenditure Variance and ii) Fixed Overhead Volume Variance.

i) Fixed Overhead Expenditure Variance (FOEV)

This variance has been described by ICMA, London as 'the difference between the budget cost allowance for production for a particular control period and the amount of actual fixed expenditure attributed and charged to that period'.

FOEV = Budgeted fixed overhead - Actual fixed overhead

(or) Budgetary quantity x Standard overhead rate - Actual Fixed overhead

ii) Fixed Overhead Volume Variance (FOVV)

This variance has been described by ICMA, London as 'that portion of the fixed production overhead variance which is the variation between the standard cost absorbed in the production achieved, whether completed or not, and the budget cost allowance for a particular control period'.

FOVV = Standard Fixed overhead recovery rate (Actual quantity - Budgeted quantity) Fixed Overhead Volume Variance can further be divided into -

i)                    Productivity variance

ii)                   Capacity variance

i) Fixed Overhead Capacity Variance (FOCV)

FOCV variance has been described by ICMA, , London as 'that portion of the fixed production overhead volume variance which is because of working at higher or lower capacity than standard'.

FOCV= Standard recovery rate (Standard quantity - Budgeted quantity)

ii) Fixed Overhead Productivity Variance (FOPV):

FOPV variance has been described by ICMA, London as 'that portion of the fixed production overhead volume variance which is the variation between the standard cost absorbed in the production accomplished, whether completed or not, and the actual direct labour hours worked (valued at the standard hourly absorption rate).

FOPV = Standard overhead rate (Actual quantity - Standard quantity)

Sometimes, other variance, called as calendar variance may also be calculated as -

Standard rate per hour (Possible hours - Budgeted hours) (or) Standard rate per unit (Possible units - Budgeted units)


Related Discussions:- Fixed overhead variance (fov)

Direct and indirect costs, Direct and Indirect costs Recall such direc...

Direct and Indirect costs Recall such direct costs are costs which can be traced particularly to the end product of the production procedure while indirect costs cannot be so

Cost of labor, The number of workdays varies from month to month due to the...

The number of workdays varies from month to month due to the number of weekdays, holidays, days of vacation, and sick leave taken in the month. The number of units produced in a mo

Recording Transactions, I have a project due this week and I am having slig...

I have a project due this week and I am having slight issues with the transactions. I cannot seem to receive the correct titles under the recordings

Process cost report, Process Cost Report This is a commonly employed s...

Process Cost Report This is a commonly employed statement that traces the flow of units produced and costs incurred in the production process. The report is prepared for every

Assignment of variance in variance calculation, Assignment of Variance in V...

Assignment of Variance in Variance Calculation In variances calculating, the calculations require to be detailed sufficient hence the responsibility for the variance can be a

Estimating, how do you calculate estimating cost for the last of the year b...

how do you calculate estimating cost for the last of the year based on activity during the first half of the year

Investment, under which type of asset the investment comes

under which type of asset the investment comes

Decision making cycle, Decision Making Cycle Steps in decision-making ...

Decision Making Cycle Steps in decision-making cycle are as: a) Clearly define the objective that is to be the focus of the decision. This is significant in order that the

Compute the most profitable combination of products, GZ Inc. manufactures t...

GZ Inc. manufactures two products that require both machine processing and labor operations. Although there is unlimited demand for both products, GZ could devote all its capacitie

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd