Fixed overhead variance (fov), Cost Accounting

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)

Posted Date: 10/15/2012 7:37:48 AM | Location : United States







Related Discussions:- Fixed overhead variance (fov), Assignment Help, Ask Question on Fixed overhead variance (fov), Get Answer, Expert's Help, Fixed overhead variance (fov) Discussions

Write discussion on Fixed overhead variance (fov)
Your posts are moderated
Related Questions
1. Shares were certified at a premium of Rs. 1.50' per share. 2. Throughout the year Taxation liability regarding of 2002 was Rs, 20,000 and paid. 3. Throughout the year, Rs.


Cost Element Stage 1. Cost Elements The raw data concern with Labour, Expenses, and Materials are gathered from Invoices, Payroll, and Requisitions and Goods Issued Notes

Handy-Man Services is a repair-service company specializing in small household jobs. Each client pays a fixed monthly service fee based on the number of rooms in the house. Records

The Cash Cycle: so as to deal with the problem of cash management we should have a concept about the flow of cash by a firm's accounts. The entire process of such cash flow is ide

Farmer Dorr figures that her fixed costs are $2,000, and the relevant portion of her total cost curve is:                                           Thousands of

Eagle Company is considering the purchase of an asset for $100,000. It is expected to produce the following net cash flows. The cash flows occur evenly throughout each year. Comput


creating a decision treeplan.

F ixed 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 pro