Fixed Overhead Analysis

The video tutorial explains fixed overhead costs, which are expenses a business incurs regardless of its level of operations, such as rent. It covers the budgeting process, resource allocation, and the importance of analyzing fixed overhead to identify budget variations. The tutorial also discusses the types of variances, including expenditure and volume variances, and how operations can impact fixed overhead costs, potentially leading to step costs.

What is an example of a fixed overhead cost?

• Employee wages

• Building rent

• Advertising expenses

• Raw materials

Why is budget analysis important in managing fixed overhead?

• To increase sales

• To efficiently allocate resources

• To expand business operations

• To reduce employee turnover

What does fixed overhead analysis help identify?

• New market opportunities

• Overhead costs allocated to specific jobs

• Customer satisfaction levels

• Employee performance issues

What is another term for fixed overhead expenditure variance?

• Efficiency variance

• Sales variance

• Cost variance

• Production variance

How can operational changes affect fixed overhead costs?

• By improving customer service

• By lowering product prices

• By increasing step costs

• By reducing the number of employees