Fixed overhead budget variance
In one sentenceThe difference between actual fixed manufacturing overhead and the amount estimated for it in the budget; also called the spending variance.
Simply put
Fixed costs, such as factory rent, supervisors' salaries and machine depreciation, do not change with production volume. So you compare the actual with the budget directly, without any adjustment for quantity.
An increase is unfavorable, usually caused by a rent increase, hiring an extra supervisor, or maintenance that was not in the plan.
Worked example
A confectionery factory estimated its fixed overhead for the month at 30,000 SAR, and it actually came to 31,000 SAR.
Actual31,000 SAR
Budgeted30,000 SAR
Difference31,000 − 30,000 = 1,000 SAR
Budget variance (unfavorable)1,000 SAR
Formula: Actual fixed overhead − Budgeted fixed overhead
Don't confuse it with
Fixed overhead volume varianceIt is not about spending, but about producing less or more than the capacity on which the absorption rate was based.