Fixed Overhead Expenditure Formula

Fixed Overhead Expenditure Formula

Fixed overhead expenditure Formula has been shown below. This formula has been explained with an example.

Fixed overhead Expenditure = Budgeted FOH – Actual FOH

Difference between budgeted and actual fixed overhead is technically known as fixed overheads variance. This concept has been explained with an easy example

Fixed overhead Expenditure Formula Example

Budgeted Expenditure = 80,000

Actual Expenditure = 90,000

Solution

Fixed overhead Expenditure = Budgeted FOH – Actual FOH

=80,000-90000

=10,000

Favorable and adverse fixed overhead Expenditure

Where actual expenditure is more than budgeted expenditure, then variance is called adverse fixed overhead expenditure variance. When actual fixed overheads are lower than budgeted overhead, then variance is regarded as adverse.

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