Page 406 - F2 - MA Integrated Workbook STUDENT 2018-19

Chapter 15

Test your understanding 8

Variance $ A F

= budgeted fixed cost – actual
fixed cost.
Fixed overhead 
expenditure
=$120,000 / 12 – $9,800
= $200

Actual 600 ×
production $20=
volume × FOAR $12,000
Budgeted 500 × $20
Fixed overhead volume 
production = $10,000
volume × FOAR
Fixed overhead $2,000
volume variance

Fixed overhead Standard hours × 600 × 
efficiency FOAR per hour 4 × $5
=
12,000
Actual hours × 1,970
FOAR per hour × $5 =
$9,850
Fixed overhead $2,150
efficiency variance

Fixed overhead capacity Actual hours × 1,970 × 
FOAR per hour $5 =
$9,850
Less: Budgeted 500 × 4
expenditure × $5 =
$10,000
Fixed overhead $150
capacity variance

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