Why fixed costs are not constant How can a fixed overhead spending variance occur?
How can fixed costs be different from the budget if they are fixed? Remember, fixed does not mean constant. Fixed simply means that the costs do not vary as a result of changes in the activity. However, actual fixed overhead costs can be different from budgeted fixed overhead costs for some other reason. For example, a salaried factory employee may resign, die, or be promoted to an administrative position. Any cost can change in the short run. It is the reason that costs change that separates variable costs from fixed costs. What does the fixed overhead spending variance mean? The meaning of the fixed overhead spending variance is somewhat different from the meaning of the variable overhead spending variance. Although both spending variances measure the difference between actual overhead cost incurred and budgeted overhead cost, the budgeted amounts are calculated differently. The budget amount included in the calculation of the fixed overhead spending variance can not contain an estim
