In a standard costing system, how do we compute the following? : i) Total Fixed overhead ii) Fixed overhead expenditure iii) Fixed Overhead Volume iv) Fixed overhead volume capacity v) Fixed overhead volume efficiency

In a Standard Costing System the following formulas are used for getting the desired results :-

1. Total Fixed Overhead = Absorbed Fixed Overheads - Actual Fixed Overheads

Absorbed Fixed Overheads = Standard Fixed Overhead Rate per Hour * Standard Hours for Actual Production

or

Absorbed Fixed Overheads = Standard Fixed Overhead Rate per Unit * Actual Production in Units

Actual Fixed Overheads are the actual amount of overhead incurred cand provided in the question.

2. Fixed Overhead Expenditure = Budgeted Fixed Overheads - Actual Fixed Overheads

Budgeres Fixed Overheads= Standard Fixed Overhead Rate per Unit * Budgeted Production in Units

or

Budgeted Fixed Overheads = Standard Fixed Overhead Rate per Hour * Budgeted Hours

Actual Fixed Overhead are the Overheads actually incurred and provided in question.

3. Fixed Overhead Volume = Absorbed Fixed Overheads - Budgeted Fixed Overheads

How to calculate Absorbed and Budgeted Fixed Overheads are already discussed in Parrt 1 and 2 mentioned above.

4. Fixed Overhead Volume Capacity = Budgeted Fixed Overhead for Actual Hours - Budgeted Fixed Overheads

Budgeted Fixed Overhead for Actual Hours = Standard Fixed Overhead Rate per Hour * Actual Hours used in Production

Budgeted Fixed Overheads are already discussed above.

5. Fixed Overhead Volume Efficiency = Absorbed Fixed Overheads - Budgeted Fixed Overhead for Actual Hours

Absorbed Fixed Overheads and Budgeted Fixed Overhead for Actual Hours

Notes :

The - sign indicates the word less.