 Dear students, in last few sessions, we have discussed about budgetary control and we have also in the last session started the discussion on standard costing. To take a brief review, budgetary control was used as a planning and control mechanism. Standard costing is primarily a control tool. It feeds into budgets. It helps in making estimates, but the main advantage of standard costing is it acts as a very good mechanism for control. In the earlier session, we have seen the advantages of standard costing. We have also discussed how the variances are calculated, particularly material variances. To take a brief recap, the steps in standard costing, if you remember first start with naturally with the setting up of standard. So, first we need to set the standard. While we set the standard, we do a detailed analysis of the process. We look at which rom-tale use, which method is being followed and that goes into deciding a proper way of doing the thing and we also arrive at how much time is needed, how much quantity of rom-tale is needed and so on. So, first is standard setting. Second is recording the actuals in details. Third is comparison of actuals with standards to know the deviations. These deviations are known as variances. In fourth, the variances are analyzed. So, we would like to go into detail, know what are the reasons, why something has gone wrong, if something is good, what has cost, the cost to be lower than budgeted or standard and we would like to retain such benefits continuously. And fifth, if necessary, the standards may be revised, so that the revised standards are used for the next period. So, these steps are used in standard costing. Then we had seen that while calculating the variances, we tried to calculate the variances for each element. So, if we look at material cost, what could be the causes due to which material cost may vary, that is it may be higher than the standard or it may be lower than the standard. So, immediately it will come to your mind that first possibility is that the quantity is more. So, to make one unit of finished product P, let us say we expect 10 kgs of raw material. We might end up using 11 kgs because of more wastages, because of poor quality of raw material and so on. So, that 1 kg extra lost will lead to variance which is known as quantity variance. Second possibility is, we are estimated that we can purchase let us say at 5 rupees per kg, but due to market trends it has become 5.5. So, 50 paisa extra loss per kg that is a price variance. Of course, there can be many other causes, but the main distinction or the main bifurcation of material variances into quantity and the prices. So, we would like to know how much deviation is due to quantity, how much deviation due to price. Then in turn if it is due to price, we will look at is it the inefficiency of purchase department or is it that the market trends has really changed and so on. First step of variance analysis, we calculate the variances, we break them down into their component and then of course, management will look at what has gone wrong, what are the causes and so on. So, in our last session we had done material variances. In today's session, we will go a next step that is we will calculate labor variances, we will also solve some cases on the same. Then we will look at overhead variances, which in turn can be variable overheads or fixed overheads. So, variances for both the types of overheads we will see and we will also look at sale variances. So, these are the different type of variances which we will try to discuss today. Now, let us look at the slides which we had seen last time. In our last session, we had started with this, we had spoken about the steps which I have done recap today, then the types of standard variances and so on. I hope you remember what is a standard, it is a norm or a benchmark which is used for comparison and it is very meticulously calculated. Though here the example of standard of passing is given, this is a sort of quality standard, we are discussing more on the cost standards. So, just try to recollect what we had done last time, that is why I am showing you the slides. So, these are the steps in brief, we set the standard cost, we record the actual and we compare and analyze known as variance analysis. Then standards can be of various type, if we assume that 100 percent efficiency is achieved the most suitable conditions, then it is ideal standard. Similarly we follow that there will be few losses, there will be a good efficiency, but not ideal efficiency that leads us to normal standard and you can also have a very, very basic standards. Then we have current standards, we have also seen variance, variance analysis, the variance is broken down into controllable variances. Then these are the types of variances, variances can be of mainly of efficiency, price or volume, these are the three main causes leading to deviation. Now, we have done for material cost last time, we will look at labor and overheads today. So, up to this we had done, now let us look at labor variances. Now, in material variances we had looked at the reasons and then we looked at the formulas. In the same way just think of what may cause labor variance, that is to say to make 1 unit as per the standard we take 5 hours. Now, we record actual, in actual if it suppose it comes out to be we have done the same job in 4 hours, what could be the reasons? Those are the reasons for labor variances. So, can you think of the reasons which lead to labor variance? Again there are two possibilities, one is the reasons due to which there is a difference in time required or time taken and the reasons due to which labor rates are different. So, what may cause differences in the time? Let us say you are students, you are learning budgetary control. So, you estimated that to finish this chapter you will take 5 hours, but actually within 4 hours you could finish it. Suppose it happens, what could be the causes? Why you could do the same work faster? One very important cause is motivation. If you feel motivated, if you from inside you feel that yes we must do it, then the work can be done much faster. Same thing is true for the labor working in a factory. If they are demotivated, this work is burdened on me, then they will do it very slowly. Whereas, if they feel from within they want to do it fast, then due to motivation the work can be done much faster. Another cause could be what type of equipments they have? If they have good equipments which are efficient, which are running properly they can work faster. Whereas, if the equipments are continuously getting stopped, they require repair, there are some issues with the use of equipment, then naturally the worker speed goes down. Then the team spirit, then there could be reasons like more holidays in a particular month leading to disturbance of the work schedule. So, due to some or other reasons time taken may vary. These are one type of causes. The other type of causes because rate has varied. The wage rate itself has changed. Now, due to what the wage rate can change, I will just show you the next slide. I think we have already discussed this time related issue. So, it could be changes in the design or quality standards. So, what happens is then workers have to study, they have to learn the new design. That takes time. Then low motivation, poor working conditions, improper scheduling, inadequate training. Of course, I have listed a few causes. There can be many more causes. They can be negative. They can be positive both ways. Then what could be rate related issues? So, one is increment or high labor wages. Then overtime, when the overtime is to be paid, it is paid at a premium rate at a higher rate. Higher shortage may force the company to pay higher rate and there might be agreement between union and management due to which higher rate has been now promised. So, these are the reasons why there is a labor variance. So, mainly two categories time related and rate related. Now, from this, can you derive the formulas? I have brought you back to material variance formulas so that on the similar lines, you can think of formulas for labor cost. So, just have a look at formulas for material cost. I am sure you can imagine what will be the formulas for labor cost because they are very similar. They have a same logic. So, you will first calculate the labor cost variance. You will divide it into labor rate variance and labor usage variance or labor efficiency variance. So, in material cost, we had price and usage. In labor cost, we have labor rate and labor efficiency plus there is one more variance that is known as labor idle time. So, labor variances can be divided into rate efficiency and idle time. So, just imagine what would be the formulas for labor cost variance. If you have guessed correctly, I hope you can cross check it now. So, we have labor cost variance which is standard hours into standard rate that is you know the standard cost minus actual hours into actual rate which is the actual cost. So, we compare standard cost with the actual cost to know the labor cost variance. Next is labor rate variance. In labor rate variance, we compare the rates. So, within the bracket, we have standard rate minus actual rate and that is multiplied with actual hours because that is the hours that actual rate was paid. That is labor rate variance. Third is labor efficiency variance. In efficiency variance, we compare standard hours with actual hours worked and that is multiplied with standard rate. So, if workers work more efficiently, the actual hours will be lesser. So, as we were seeing the standard hours suppose are 5, but we can finish the work in 4 hours. It will save 1 hour and we will multiplied by the standard rate to know how much was the saving because of efficiency that is known as labor efficiency variance. The third type which is unique to labor variances is idle time. This is idle hours into standard rate. Now, what do you mean by idle time? I think everyone knows because each one of us due to some or other reason end up spending some idle time. So, in factory scenario what may happen is workers have come, they are ready for work, but suddenly there is a power failure. It leads to idle time or there is some accident due to which the whole work gets stopped. There might be some external cause like material is not available. So, workers sit idle. So, such time is called as a idle time. This does not mean that workers are idle and they are not working. That is different. That is the efficiency variance. Here by idle time what we mean is beyond the control of workers, there is some external cause forcing them to stop the work. So, that is known as idle time. So, we look at idle hours into standard rate that gives us idle time variance. And labor efficiency variance looks at actual hours worked versus what they should have worked. So, there within the bracket we have taken standard hours minus actual hours. So, overall labor cost variance is broken down into rate efficiency and idle time. Now, let us look at a case so that how to calculate labor variances becomes more clear to you. So, here I have given a small problem. We are having standard and actual figures for the labor. So, standard time for a job is 2000 hours. Standard rate per hour is 10. Actual time is 1800 hours. Actual wages are paid at 21600 and idle time which is included in actual time is 100 hours. So, using this data we have to compute variances. So, now think over how we can compute. So, first variance which we would like to calculate is the total labor cost variance. So, how much ought to have been the wages and how much is actually paid that comparison will be labor cost variance. Then we will break down that variance into three types. What are the three types? As we just discussed, first it could be the issue of rate. So, we thought of paying at a standard rate of 10, but we might pay more or less. If there is a difference that will lead to rate variance, then there could be difference in the efficiency. So, standard time for doing that job was 2000 hours. We will have to look whether there is a difference. That difference shows efficiency or inefficiency, it is known as efficiency variance and third is the loss caused due to idle time. Now just think over how much will be labor cost variance, the first variance or the total variance. Before going for calculation of variances, it will be better if we calculate make a table. So, try to always make a table like the way I have shown it. So, you will record the actual and the standard, so that at glance we know the data. You can go back, the standard time is 2000, the rate is 10, so that has been put in the table. So, 2000 into 10, 20,000 is the standard cost. Actual time is 1800, we do not know the rate, but we know the actual wages paid. So, actual time is 1800 and the wages paid are 21, 600. So, working back we come to know that 12 rupees per hour is the rate which was paid. So, once this standard and actual information is available, we can calculate the labor cost variance. So, you can have a look at the formula, I will just make this smaller, so that the formula is clear to you. So, standard hours into standard rate minus actual hours into actual rate, we have already done this calculation. So, the standard cost is 20,000 and the actual cost is 21, 600, so 20 minus 21, 600 we get minus 1600, it is also known as 1600 adverse. So, I have written both minus 1600 and I have also stated adverse. So, you do not have to write both, you can write it as minus 1600 or say 1600 adverse, I think I will also specify it, so that it is more clear to you. So, either it can be written as 1600 minus or it can be written as 1600 adverse. Now, this was the total difference in the labor cost. So, we assumed that we would spend 20,000 for doing this work, but we have actually spent 21, 600, so that 1600 spent more represents labor cost variance. Now, rate variance, now so we will break down that 1600 into its causes. So, the cost cost could be rate, as you can see it in the table very clearly that as per the norms, we ought to have paid 10, we have actually paid 12, so 2 rupees more per hour and we have paid all this for 1800 hours, we have not paid for 2000 hours. So, we do not have to multiply by 2000, we will multiply by 1800, so you can see the formula, it is actual hours into bracket, standard rate minus actual rate. In other words, it is 1800 into 10 minus 12, so it is minus 3600 or as we have seen, we can also call it as 3600 adverse, I am just restating it, so that it is more clear to you. Now, what could be the next cause apart from rate? The difference also could be due to efficiency, so how much is the difference due to efficiency? You can see that the work which was allowed 2000 hours, you have done it in 1800 hours, so this is the efficient functioning, they have saved some time, over and above that 100 hours were lost, so from 1800, we need to remove that 100, so actually they work only for 1700 hours, so they were allowed to work for 2000 for doing this job, but they have worked for 1700, which shows that 300 hours were saved because of efficiency. That will be calculated as a efficiency variance, so you can look at the variance, the lever efficiency variance, it is standard rate into standard hours minus actual hours worked, so standard hours are 2000, actual hours worked, so instead of taking 1800, we have removed 100, because that part is lost because of idle time, that was not lost by the operators or the workers on their own. So from 1800, we remove 100, that is why it says instead of actual hours, we have used the term actual hours worked, so 2000 minus 1700, so 300 hours were saved, we have multiplied by 10 rupees, which is the standard rate. Now actual rate is 12, but as per the norms, we should have multiplied by 10, we should have paid at 10, so for efficiency variance, we do not take 12, we take at a standard rate, so we have multiplied at 10, so 3000 favourable, so by favourable, what we mean is that much of time was saved, our profits will go up by 3000, so it is called as 3000 favourable. Now the last variance, it is for idle time, we know that 100 hours are lost, so the formula is idle hours into standard rate, we have just added minus, because ultimately idle time is a loss of time, so because of idle time, our profit goes down, that is why we say minus 100 into 10, so minus 1000 or it can also be called as 1000 adverse, so both the terminologies are fine, you can either say it is minus 1000 or you can say 1000 adverse, is it fine, are you all getting it, so I hope that you remember the earlier problem on material cost as well, if not just have a look at it, I am just taking you back, because it will be very clear to you that both the variances are quite similar, just there is a small change, instead of quantity in material we call it time, instead of price in material in labour we call it rate, have a look at the problem on material cost, so here this was done in our last session, we are seeing that to produce 200 units, the material quantity as per norms was 2000, but the actual consumption was 2200, this quantity could be in some kg's or some other unit like that, I will just specify it as kg, so that it is more clear to you, so to make 200 units perhaps we might have consumed 2000 kg's, the price was 40 or 37, the actual as per the standard it was supposed to be 40, but we have managed to purchase that material at 37, so again at that time also we had made the table for comparison of standard and actual, so 2000 into 40 versus 2200 into 37, now here you can see that instead of spending 80, we have spent 80 1400, so 1400 minus or 1400 adverse that was broken into material price variance, so 40 minus 37, 3 rupees was saved for 2200 kg's, so 6600 favourable, but on usage there was excess consumption instead of 2200 was kg's was used at 40 rupees, so 200 into 40 minus 8000, so usage variance is 6600 minus 8000 1400 adverse, this is the usage variance, of course we had done it last time, but I am just trying to show you that both the variances are quite similar, in labour in addition to rate and efficiency, we also have the concept of idle time, that was the only extra point, is it okay. Now let us do one more case with this the concepts will be even more clear to you, now it says that to produce 1200 units of product P, following material was consumed that is actual, material quantity is 2500, price per unit is 45, now as per the standard to produce 1000 units, we are supposed to use quantity of 2000 at a price of 40, now with this data we are required to calculate material variances, so how will you calculate, just think over, can we do it the way we did in case 1, make a table, compare, call, calculate cost and price, cost price and usage variances, just try to make the table, when you make the table, note that there is a difference in the output as well, because it says that as per standard to produce 1000 units, this was permitted, but actually we have produced 1200 units, so if you see carefully, you cannot compare this standard with this actual, because this standard is for 1000 units, whereas actual production has been now 1200 units, so we will have to make a standard for 1200 units and then it can be used for comparison, so now look at the standard and actual tables, so now I have not copied this 2000 directly, often that mistake happens, that is why I am waiting and telling you repeatedly, so when you make the standard, it is 2000 into 1200 upon 1000, so now the standard has been reset for 1200 units of output, so I get a standard as 2400 into 40, so 96000 is a standard cost, so actually we can directly copy its 2500 into 45, so that is as given, so 2400 into 49000, 96000 was to be spent, but we have consumed 2500 quantity of raw material and the rate has also increased to 45, so actual cost is 12,500, now with this data I do not think it is very difficult to compute the variances, we already know the formulas, so have a look at the formulas now, so material cost variance, it is the standard quantity into standard price minus actual quantity into actual price or you can simply compare these two amounts, it is 96000 minus 112500, so you get minus 1600, I will just rewrite it for more clarity, so it is also known as 16500 adverse, is it right, are you all getting it, now let us try to break it down into quantity, how much is the price variance, we will first compare the prices 40 minus 45, so in bracket we have standard price minus actual price into actual quantity, so 40 minus 45 into 2500, so 5 rupees was saved 5 into 2500, so you get 12500 minus, I am sorry here wrongly it is written favorable, actually it is adverse, so anyway we are rewriting it for more clarity, so 1200 is also adverse, 1600 was also adverse, so total material cost variance was 16500 of which due to rate company was forced to pay 12500 more, so 12500 adverse, now let us look at usage, so instead of using 2400 as for norms, they have consumed 2500, so 100 units more, so we compare standard quantity minus actual quantity and multiplied by standard price that is 40 rupees, so we get 4000 adverse, now just cross check whether whatever we have done is correct or no, so 4000 plus 12500, you can get back this 16500, same way I think for earlier also we can do, so for labour variances if you remember we had calculated this variances, the labour cost was 1600 adverse, then that was broken down into rate which was 3600 adverse, efficiency was 3000 favorable and idle time was 1000 adverse, so just take total of these three figures or you can take total here minus 3600 plus 3000 minus 1000, so you will see minus 4600 plus 3000, so you will get minus 1600 or 1600 adverse, so it is good always to cross check because this labour cost variance is a total variance, it is essentially being broken down into rate efficiency and idle time, in case of material our material cost variance we had broken down into price and usage, is it clear now, both material and labour variances, now let us go to the next variance, that next variance is known as overhead variance, so we had already seen material and labour which are the two elements of cost, now let us look at overheads, now before going for the formula I would like you to think of the reasons, the way in case of labour we had first identified the reasons for labour variances, what could be the reasons for overhead variances, just think over, in case of labour we broke it down into time and rate related issues, can you do it with overheads, what are the examples of overhead costs, say electricity charges, rent, maintenance cost, security cost, these are all overhead costs, now the budget for the overhead is set in the beginning, let us say the budget is 1 lakh, if the actual cost is 1 lakh 20000, there is a variance, what could be the causes, just think over, I hope you are getting some causes, one possibility is the power rates have increased or there is a possibility that power consumption has increased, which will lead to difference in the electricity charges as budgeted versus as actual, like that each of it could have some impact, so if the rent agreement comes fresh with a higher rent, then there will be a rate change in the rent, so broadly if you try to classify the reasons, one possibility is due to under or I will just go to the next slide, which will be I think easily understandable of everyone, so some of the causes could be due to inflation, that the cost itself has increased, if there is no proper control on cost or if there is no proper planning also the cost may increase, now other possibility of this variance is due to under or over absorption of fixed overheads, now do you remember what is this under and over absorption, now what happens is sometimes the costs are linked to number of units you make, that happens in case of variable overheads, but many of the costs like rent remain fixed, so if we have contracted to pay rent of 1 lakh and we had planned to make 1000 units, we estimate that the rent comes to 100 per unit, 1 lakh is the rent, 1000 was the number of units as budgeted, so the cost is 100 per unit, actually rent cost remains at 1 lakh, so no variance, but if the number of units fall down instead of 1000, suppose number of units become 800, then what will happen, since we are charging at 100 rupees per unit, on 800 rupees we will recover only 80000 of rent, but the actual rent is 1 lakh, so it will lead to difference of 20000, that is a difference because of under or over absorption, if the number of units increase beyond the budget exactly opposite will happen, that we will recover more rent, but actual rent remains less, so in case of overheads what happens is one type of causes is what we saw earlier, because of inflation, lack of control or lack of planning, wherein the budgeted cost itself gets exceeded or sometimes if you are plan control is good, budgeted cost is brought down, actuals are less than the budget, but the other type of causes is because of under or over absorption, so if there is a difference between budgeted units and the actual units, then that will also cause disturbance in the absorption of overhead costs, so such causes could be fall in demand or improper planning, improper planning in a sense improper estimation, breakdowns, power failures, labor problems, so for any reason if the actual units and budgeted units do not match, it will lead to overhead variances, now what will be the formulas, in case of overhead variances we have two types, we have variable overheads, we have fixed overheads, now let us look at the formula, overall is I think very simple for the variable overhead cost variance, we take standard hours into standard rate, that will be the standard cost as what should have been incurred minus the actual cost, that is the variable overhead cost variance, now this can be broken down into expenditure and efficiency, expenditure variance is we look at how much should have been spent and how much actually has been spent, so it is on actual hours into standard variable overhead rate minus the actual overhead cost, the other possibility is there is a difference in the efficiency, so we compare standard hours minus actual hours into standard variable overhead rate, if you look at this overhead variance it is quite similar to labor variance which we had seen, in labor cost also we had two variances, we had rate variance and efficiency variance if you remember, so in variable overhead it is similar, one of the causes is because of efficiency, for example what may happen is some work could have been done in 5 hours, but we did not do it efficiently, we took 6 hours, so at what will happen, one is more time is spent, so more wages, but along with that what also happens is there is more consumption of electricity, more consumption of other facilities, so we must have completed the work in 5 hours, but we took up 6 hours, so for that 1 hour extra variable overheads are incurred, that is because of the efficiency, so it is known as variable overhead efficiency variance, so you can see here we have compared standard hours minus actual hours and multiplied by standard variable overhead rate, getting it? The other cause is because the expenditure itself has increased, like for example if electricity rates have gone up, so there for standard we take actual hours into standard rate and we just subtract it with the actual overheads, so if the actual rates have exceeded the actual overhead cost will increase and that will show some variance, getting it? Now let us look at a case on variable overheads, with that it will be more clear to you, read the case carefully, so standard hours per unit was given at 10 and variable rate, overhead rate per hour was estimated at 5, now when the actual data came, the actual variable overhead incurred are 24,50,000, actual output in units is 50,000 and actual work hours are 5,50,000, now using this data try to calculate various variable overhead variances, now how to do it, just think over, so we have the actual cost which is 24,50,000, now we looking at the actual production of 50, we should look at how much cost should have been incurred, that is our standard cost, that we will compare with the actual which is 24,50 which will give us variable overhead cost variance and then we will break it down into expenditure and efficiency. So how much will be the cost variance, are you able to guess, could you calculate looking at the data, it is very simple, I think if you just look at it carefully you can get it, so if you look at the standard figures on top, you will realize that it is 10 into 5, so 50 rupees is the cost, variable cost for 1 unit, am I right, because to make 1 unit it takes 10 hours and variable overhead rate is supposed to be 5 per hour, so 50 rupees becomes the standard cost per unit and actual output is 50,000. So 50,000 into 5, 25 lakhs is a standard variable overhead cost, we have incurred 24,50,000, now let us look at the formulas, so we have looked at standard hours into standard rate, the standard hours was to make 50,000 units, it is a 10 per unit, so we are permitted to have 5 lakh hours at 5 per unit, so 50,000 into 10 into 5 that is 25 lakhs and we have actually incurred 24,50,000, so 25 versus 24,50 we get 50,000 favorable, plus 50, so 50 favorable, now we can break it down into expenditure, so part of it is because the cost per hour itself has been brought down, so we can look at the actual hours, see the actual hours consumed was 5,50,000 and 5 rupees per hour is a rate, so 550 into 5 that was something which we could have incurred on, so actual hours into standard rate and our variables which are actually incurred are 5,50,000, so we take 2,50,000 into 5 from where as this 250 arrived, it is 50 into 5, so 50,000 units is incurred is produced and we were allowed to use, consume at 5 rupees, so we have 250 into 5 minus 24,50,000 which is already given, so 3 lakhs favorable is a expenditure variance, is it clear, now let us look at efficiency variance, now efficiency as the name suggests focuses on number of hours, so standard hours are 50,000 into 10 means we could have spent 5 lakh hours, but we have spent 5,50,000 hours, so 5 minus 5,50, so 50,000 hours more into 5, so 2,50 minus or we can say 250 adverse and expenditure was 3 lakh favorable, so minus 250 plus 3 lakh you can say we get 50,000 favorable which is our cost variance, so is it clear, so variable over cost variance was broken down into efficiency and expenditure, now let us try to understand fixed overhead variances, if variable overhead is very clear to you, let us go for fixed overheads, now as we did for material and labor you just have a look at what are the causes, so in case of fixed overheads one cause was difference in the number of units then the other causes because could be inflation, lack of planning and so on, so these are this is the formula for fixed overhead cost variance which is the total cost variance, it is absorbed overheads minus actual fixed overheads, now the question comes is what is absorbed overhead, can you think over what is absorbed, so looking at the number of units which were produced in our example earlier I was trying to tell you that if we produce 1000 units we pay rent of 1 lakh, so we had in mind a rate of 100 per hour which is called as absorption rate, so based on the actual units, if our actual units are only 800 we will multiply 100 by into 800, so instead of 1000 units we produce 800 units, so 800 into 100 we have absorbed overhead of 80,000, if your actual rent remains at 1 lakh there will be a difference, that difference is known as fixed overhead cost variance, now this cost variance can be broken down into its causes, what are the causes, the major causes are because of efficiency or because of expenditure or because of volume, so first formula is for expenditure variance, you can see fixed overhead expenditure variance, it is budgeted hours into standard fixed overheads minus actual fixed overheads, so at budgeted rate we see that if budgeted hours were the time as per the budget was consumed and rate also if we take standard that becomes the budgeted overheads minus actual overhead that is a expenditure variance, then we look at the volume issues, so standard quantity minus actual quantity, so we take a difference into quantity and multiplied by the standard overhead rate that is a volume variance, so fixed overheads we try to break into expenditure and volume. Now here today we have done 4 5 important type of variances, first we did recap up to material variance, then today we have discussed the reasons for labour variances, we have also seen the formulas for labour variances and we have done one case on labour variance, are you throw with it now, we have also done one case involving a different type of material variance, where in the standard units and actual units were different, so we have reset the standard and then calculated material cost variances, then in later part we have discussed variable overhead variances and we have also done one case on it and just now we have seen the formulas for fixed overhead variances, we will look at the cases on fixed overhead variances and we will also discuss the sales variances in our next session, thank you so much.