Fixed Overheads Total Variance Formula

Fixed Overheads Total Variance Formula

Fixed overhead total variance formula has been shown below; this formula has been explained with an example.

Fixed Overhead Total Variance =FOH (Standard) – FOH incurred

FOH - Fixed Overheads

In simplest term Fixed overhead total variance is a comparison between expected fixed overhead and actual fixed overhead at particular level of activity (production). This concept has been explained with an easy example below

Fixed Overheads Total Variance Formula Example

Unit Produced by Company= 20,000

Absorption Rate = $ 5 per unit

Actual Fixed overheads = 130,000

Solution

Absorbed = unit produced x Rate

= 20,000 x $ 5

= $ 100,000

Fixed Overhead Total Variance = Fixed overhead incurred – FOH Absorbed

=100,000-130,000

=30,000 (Fixed overhead total variance)

 Fixed overhead variance amounting 30,000/- is favorable.

Favorable and Adverse Total Fixed overhead Variance

When fixed overhead incurred are more than absorbed fixed overhead expenditure, then variance is known as adverse fixed overhead variance. When actual incurred fixed overhead are lower than absorbed overhead, then variance is known as favorable fixed overhead variance.

Variable Overheads Expenditure Variance Formula
Variable Overhead Efficiency Variance Formula 
Fixed Overhead Expenditure Formula 
Fixed Overhead Efficiency Variance Formula 
Fixed Overhead Volume Variance Formula 
Fixed Overhead Capacity Variance Formula