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Variance analysis

6.2 Splitting the volume variance
Capacity variance $
Actual hours × FOAR per hour X

Less: Budgeted expenditure Y
–––––
Fixed overhead capacity variance X – Y
–––––

Efficiency variance $

Standard hours × FOAR per X
hour

Actual hours × FOAR per hour Y
–––––
Fixed overhead efficiency variance X – Y
–––––

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