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Under costing what causes an unfavorable fixed overhead budget variance?

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Question ajoutée par Rehan Qureshi , Financial Consultant , Self Employeed
Date de publication: 2014/01/10
Rehan Qureshi
par Rehan Qureshi , Financial Consultant , Self Employeed

An unfavorable fixed overhead budget variance results when the actual amount spent on fixed manufacturing overhead costs exceeds the budgeted amount. The fixed overhead budget variance is also known as the fixed overhead spending variance. Fixed overhead costs are the indirect manufacturing costs that are not expected to change when the volume of activity changes. Some examples of fixed manufacturing overhead include the depreciation, property tax and insurance of the factory buildings and equipment, and the salaries of the manufacturing supervisors and managers. Since the fixed manufacturing overhead costs should remain the same within reasonable ranges of activity, the amount of the fixed overhead budget variance should be relatively small.

Khaled Abdelrehim ACCA DipIFR CMA
par Khaled Abdelrehim ACCA DipIFR CMA , Financial Analysis Assistant General Manager , Khalda Petroleum Company

We missed the budget in one of two aspects : spending more or produced less (soending variance or production volume variance)

Subhranshu Ganguly
par Subhranshu Ganguly , Quality Analyst. , WIPRO

If the actual overhead cost is higher than the budgeted overhead cost.

Srinivas Kotni ACA CMA
par Srinivas Kotni ACA CMA , Finance Controller , Ecolab

Actual fixed cost spending exceeding the budget fixed cost causes unfavourable fixed overhead budget variance. 

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