Fixed Overhead Variance (FOV)
Fixed overhead variance has been described by ICMA, London, as 'the variation between the standard cost of fixed overhead absorbed in the production achieved, whether completed or not, and the actual fixed attributed, overhead and charged to that period'.
FOV = (Actual production x Standard fixed overhead recovery rate) - Actual overheads incurred
This variance may be split up into - i) Fixed Overhead Expenditure Variance and ii) Fixed Overhead Volume Variance.
i) Fixed Overhead Expenditure Variance (FOEV)
This variance has been described by ICMA, London as 'the difference between the budget cost allowance for production for a particular control period and the amount of actual fixed expenditure attributed and charged to that period'.
FOEV = Budgeted fixed overhead - Actual fixed overhead
(or) Budgetary quantity x Standard overhead rate - Actual Fixed overhead
ii) Fixed Overhead Volume Variance (FOVV)
This variance has been described by ICMA, London as 'that portion of the fixed production overhead variance which is the variation between the standard cost absorbed in the production achieved, whether completed or not, and the budget cost allowance for a particular control period'.
FOVV = Standard Fixed overhead recovery rate (Actual quantity - Budgeted quantity) Fixed Overhead Volume Variance can further be divided into -
i) Productivity variance
ii) Capacity variance
i) Fixed Overhead Capacity Variance (FOCV)
FOCV variance has been described by ICMA, , London as 'that portion of the fixed production overhead volume variance which is because of working at higher or lower capacity than standard'.
FOCV= Standard recovery rate (Standard quantity - Budgeted quantity)
ii) Fixed Overhead Productivity Variance (FOPV):
FOPV variance has been described by ICMA, London as 'that portion of the fixed production overhead volume variance which is the variation between the standard cost absorbed in the production accomplished, whether completed or not, and the actual direct labour hours worked (valued at the standard hourly absorption rate).
FOPV = Standard overhead rate (Actual quantity - Standard quantity)
Sometimes, other variance, called as calendar variance may also be calculated as -
Standard rate per hour (Possible hours - Budgeted hours) (or) Standard rate per unit (Possible units - Budgeted units)