Page 34 - 5.2 i. Manac Costing ITC Summarised Notes
P. 34

ITC EXAM PREP


                                      Costing variances









             • When absorption costing is applied: Under- or over-


                  recovery of overheads = Volume variance + Expenditure


                  variance.

             • When variable costing is applied: Under- or over-recovery


                  of overheads = Expenditure variance.

                    • The volume variance is not applicable when variable


                          costing is applied.


             • An adverse volume variance means that actual production

                  volume is less than the budgeted allocation base used.


             • A favourable volume variance: actual production volume is

                  more than the budgeted allocation base used.



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