In a standard costing system,under- or overapplied fixed overhead is equal to the sum of the fixed overhead budget variance and the fixed overhead volume variance.

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Under- or overapplied fixed overhead is determined by comparing the actual fixed overhead costs to the applied fixed overhead costs. The difference between these amounts is equal to the sum of the fixed overhead budget variance (the difference between the actual fixed overhead costs and the budgeted fixed overhead costs) and the fixed overhead volume variance (the difference between the budgeted fixed overhead costs and the applied fixed overhead costs based on standard rates and actual production volume).

In a Standard Costing System,under- or Overapplied Fixed Overhead Is