Fixed-overhead variance

Fixed-overhead variance is the total difference between actual fixed manufacturing overhead incurred and the amount applied to production under absorption costing.

Also known asFOH variance

ByHoang TruongUpdated June 30, 2026

FrameworkStandard costing

See it move

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The waterfall chart starts at applied overhead of €110,000 and steps upward through two adverse variances — a volume variance of +€10,000 and a spending variance of +€2,000 — to reach actual overhead of €122,000. The chart makes clear that the total adverse gap of €12,000 combines two distinct causes: spending more than the budgeted fixed overhead (spending variance) and producing fewer units than the denominator volume used to set the absorption rate (volume variance).

Where it fits

SubjectManagerial AccountingAdvancedTopicStandard Costing & Variance AnalysisAdvanced

The formula

LaTeX

SV_F = \text{Actual FOH} - \text{Budgeted FOH}

Variables

$A c t u a l F O H$: Fixed manufacturing overhead actually incurred (€)
$B u d g e t e d F O H$: Planned fixed manufacturing overhead for the period (€)

Adverse if actual exceeds budget; measures whether fixed costs were kept within the plan

LaTeX

VV_F = \text{Budgeted FOH} - (\text{FOR} \times Q_{\text{actual}})

Variables

$B u d g e t e d F O H$: Planned fixed manufacturing overhead (€)
$F O R$: Fixed overhead rate per unit (€ per unit)
$Q_{a} c t u a l$: Actual production volume

Adverse when actual output falls short of budgeted volume; reflects the cost of under-utilised capacity