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View Full Version : How do I calculate the capacity variance...


japingka
Mar 28, 2010, 08:53 PM
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
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