ECONOMICS

Detailed explanation-1: -What is the Fixed Overhead Spending Variance? The fixed overhead spending variance is the difference between the actual fixed overhead expense incurred and the budgeted fixed overhead expense. An unfavorable variance means that actual fixed overhead expenses were greater than anticipated.

Detailed explanation-2: -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-3: -Variable overhead spending variance is the difference between actual variable overhead cost, which is based on the costs of indirect materials involved in manufacturing, and the budgeted costs called the standard variable overhead costs.

Detailed explanation-4: -Budget variance equals the difference between the budgeted amount of expense or revenue, and the actual cost. Favourable or positive budget variance occurs when: Actual revenue is higher than the budgeted revenue. Actual expenses are lower than the budgeted expenses.

Detailed explanation-5: -The fixed overhead volume variance is the difference between the amount of fixed overhead actually applied to produced goods based on production volume, and the amount that was budgeted to be applied to produced goods. This variance is reviewed as part of the period-end cost accounting reporting package.