BU247 Lecture Notes - Lecture 8: Fixed Cost
Document Summary
Therefore there is never a fmoh sales-volume variance: for a level 3 analysis (deconsturiting the flexible budget variance) the entire vraince is due to a rate variance since the efficiency variance does not effect fmoh. The quantitiy of dmh in the cost allocation base remains unchanged for the relevant range. Production volume variance calculations and analysis: fmoh variance analysis requires the calculation of the production volume variance. The production volume variance arises due to the misallocation of fmoh from using normal costing in the traditional system: the normal costing sytem musltiplies the actual quantites by the budgeted rates. The pvv is the difference between budgeted fixed overhead and the fixed overhead assigned by using the actual quanitites of output.
