Bhimani, Horngren,
Datar and Rajan,
Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012 Students often erroneously believe the FOH PVV is analogous to the VOH efficiency variance. The FOH FBV
is analogous to the VOH FBV, which includes both the VOH spending and the efficiency variances. The PVV is anew concept that is unique to FOH. The PVV arises only because the lump-sum FOH in the FB usually differs from the FOH allocated to WIP (BOHR ×
BQIA). (In contrast, for DM, DL and VOH, the FB =
Costs allocated to WIP; there can be no
PVV for these costs)
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