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)

Traditional income statement, Traditional income statement: The DU Inn i...

Traditional income statement: The DU Inn is an 80-room hotel located on some mountaintop in Colorado. It has no bar or restaurant and is positioned as a mid-priced, good quality

Determine operating segments, Vincent Ltd operates solely in Western Austra...

Vincent Ltd operates solely in Western Australia and the chief operating decision maker has identified five operating segments: Mining, Insurance, Retailing, Manufacturing and Tran

Marginal cost, Marginal Cost Marginal cost is the change in a firm's co...

Marginal Cost Marginal cost is the change in a firm's cost of production. It is related to a unit change in its output, or the added cost of producing the next unit. The margin

Determine the overhead allocation rate, Vintage Auto Company manufactures p...

Vintage Auto Company manufactures parts to order for antique cars. Vintage Auto makes everything from fenders to engine blocks. Each customer order is treated as a job. Vintage Aut

Accounting for labor, weekly working hour 48 , hourly wage rate 15$ , pri...

weekly working hour 48 , hourly wage rate 15$ , price rate per unit 6$ , normal time taken per piece 36 minuets , normal output per week 220 pieces , actual output per week 275 pie

Role in business, what is the role of cost accounting in business

what is the role of cost accounting in business

Uses of funds, Dividends                                                   ...

Dividends                                                                                        ................ Non-operating losses not passed through P and L A/c

Cost of goods manufactured statement., These balances for a company x Ra...

These balances for a company x Raw materials $40,000 Work in process $30,000 Finished goods $60,000 for the current year the company estimated that it would work 150.000 mach

Concept of cost, explain fully the concept of the cost.how does cost accoun...

explain fully the concept of the cost.how does cost accounting contribute to the effective and efficent management of an industrial established?

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