Fixed Overheads Total Variance Formula

Fixed Overheads Total Variance Formula

Fixed overhead Total variance is difference between Fixed overhead incurred and Fixed overhead observed. Fixed overhead total variance may be favorable or adverse.

Fixed Overhead Total Variance =FOH Absorbed – FOH incurred

Example

Unit Produced= 10,000

Absorption Rate = $ 4 per unit

Actual Fixed overheads = 50,000

Solution

Absorbed = unit produced x Rate

 = 10,000 x $ 4

= $ 40,000

Fixed Overhead Total Variance = Fixed overhead incurred – FOH Absorbed

= 50,000-40,000

=10,000 (Fixed overhead total variance)

 Fixed overhead variance amounting 10,000/- is favorable.