Intermediate: Computation of fixed overhead variances A manufacturing company has provided you with the following data, which relate to component RYX for the period which has just ended:

Overheads are absorbed at a rate per standard labour hour.
Required:

(a) (i) Calculate the fixed production overhead cost variance and the following subsidi¬ ary variances: expenditure efficiency capacity (ii) Provide a summary statement of these four variances. (7 marks)

(b) Briefly discuss the possible reasons why adverse fixed production overhead expendi¬ ture, efficiency and capacity variances occur.
(10 marks)

(c) Briefly discuss two examples of interrelation¬
ships between the fixed production overhead efficiency variances and the material and labour variances. (3 marks)
(Total 20 marks) ACCA Paper 8 Managerial Finance

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Budget Actual 8400 7980 Number of labour hours Production units Overhead cost (all fixed) 1 200 22260 1 100 25 536