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    japingka's Avatar
    japingka Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Mar 28, 2010, 08:53 PM
    How do I calculate the capacity variance...
    Variable overheads $257,600
    Fixed overheads $123,200
    Estimated machine hours 22,400

    Actual overheads $360,500 actual machine hours 20,970

    This is all I've been given to work with?
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
    Senior Member
    		  
    #2

    Mar 28, 2010, 11:14 PM

    Capacity variance is calculated as:
    (Budgeted capacity - Actual capacity utilized) x Fixed overhead rate

    Fixed overhead rate = Budgeted fixed overheads/Budgeted capacity
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