Fixed overhead expenditure variance
Fixed overhead expenditure variance is the difference between actual fixed overhead incurred and budgeted fixed overhead for the period, showing whether fixed costs were spent above or below plan regardless of output volume.
FrameworkStandard costing and variance analysis
See it move
Budgeted fixed overhead for the period was €150,000. Actual spending, driven by a lease renewed at a higher rent, came in at €162,000, €12,000 above budget. Because output volume plays no part in this variance, the €12,000 adverse result reflects only that fixed costs themselves ran over plan, not that more or fewer units were made.
The formula
Variables
- budgeted fixed overhead for the period (€)
- actual fixed overhead incurred during the period (€)
Volume has no effect on this variance; it measures only whether fixed costs were spent above or below plan. Positive result is favourable.
Check yourself
A company budgeted fixed manufacturing overhead of €120,000 for the quarter. Actual fixed overhead incurred was €133,000. During the quarter the company produced 5% more units than budgeted. What is the fixed overhead expenditure variance?