Page 36 - 5.2 i. Manac Costing ITC Summarised Notes
P. 36

ITC EXAM PREP


                Absorption costing variances









             • Absorbed overhead = Overhead rate x actual units


                  produced


             • Volume variance (Under / over recovery)

                    • Difference between budgeted and actual production in


                          terms of volume

                           = (Actual units – Budgeted units) x Overhead rate


                           or


                           = Absorbed overheads – Budgeted overheads

             • Expenditure variance


                           Difference between budget and actual in Rand terms

                           = Budgeted overheads – Actual overheads



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