ECONOMICS

Detailed explanation-1: -Fixed overhead volume variance is positive when the applied fixed overheads exceed budgeted fixed overheads. This indicates that the company has over-utilized its production facilities by producing many units with the available resources. This represents a favorable condition for the company.

Detailed explanation-2: -A favorable variance means that the actual hours worked were less than the budgeted hours, resulting in the application of the standard overhead rate across fewer hours, resulting in less expense being incurred.

Detailed explanation-3: -If the actual fixed overhead cost exceeds the budgeted fixed overhead cost, the budget variance is labeled unfavorable. If the actual fixed overhead cost is less than the budgeted fixed overhead cost, the budget variance is labeled favorable.

Detailed explanation-4: -The fixed overhead budget or spending variance is the difference between actual fixed overhead costs incurred and the budgeted fixed overhead costs. This difference is due to spending controllable by management and not to a difference in plant activity.

Detailed explanation-5: -What is a Favorable Variance? A favorable variance indicates that a business has either generated more revenue than expected or incurred fewer expenses than expected. For an expense, this is the excess of a standard or budgeted amount over the actual amount incurred.