Overhead expenditure variances

[saraht]

Can any one help please? I am really struggling with the following question on a devolved assessment for RCI:<BR><BR>Standard fixed overheads:<BR>30 mins @ £1.09 per hour £0.55<BR><BR>Budgeted output 3500 boxes<BR><BR>Actual overheads<BR><BR>1750 hours £2010<BR><BR>Actual output 3660 boxes<BR><BR>What is the overhead expenditure variance? I have tried applying all the methods of calculation but am coming up with a blank. Any help would be really appreciated.<BR><BR>Thanks.

[Katemarie36]

Your standard (budgted) overheads x actual production<BR><BR>then take this away from actual overheads to give your variance

[Ditti]

Assuming that it takes 30 mins to make one the fixed o/head abroption rate is £0.545<BR><BR>Total variance:<BR>Actual 2010<BR>Absorbed: 1994.70 (£0.545 * 3660)<BR>Variance: 15.3 (A)<BR><BR>Expenditure variance:<BR>Actual: 2010<BR>Budget: 1907.50 (£0.545 * 3500)<BR>Variance: 102.50 (A)<BR><BR>Volume variance:<BR>Actual output: 3660 boxes<BR>Budgeted output: 3500 boxes<BR>Variance: 160 units (F)<BR>In £: 87.2 (F) (160*£0.545)<BR><BR>Check: 87.2 (F) + 102.50 (A) = 15.3 (A)<BR><BR>The volume variance can then be broken down into efficiency and capacity variance, efficiency should work out 87.2 (F) and capacity works out 0.<BR><BR>Hope this helps<BR><BR>Edit

[saraht]

Thanks, that helped a lot. I was obviously having a blonde moment when I looked at the question!<BR><BR>Sarah.