Variable overheads are the expenses which are incurred by the company other than direct material cost and direct labour cost. As the name denotes this cost is variable in nature. i.e.,it varies with the volume of production. The difference between the Standard Variable Overhead and the Actual Variable overhead is the Variable Overheads variance. Like Labour Cost Variance, Variable Overhead variance may be caused because of either change in rate per hour or change in number of hours from the standard time. Thus Variable Overhead Cost Variance is the sum of Variable Overhead spending variance and Variable Overhead Efficiency Variance. The following are the formulas for the same: Variable Overhead Cost Variance (VOCV) = Variable Overhead spending variance + Variable Overhead Efficiency Variance Also, Variable Overhead Cost Variance (VOCV) = Standard Variable Overhead Cost(SVOC) − Actual Variable Overhead Cost(AVOC) Variable Overhead spending Variance = Standard Variable overheads for actual hours − Actual Variable overhead cost Variable Overhead Efficiency Variance = Standard Variable overhead cost − Standard variable Overheads for actual hours Variable Overhead Spending Variance and Efficiency Variance

Question

Want to see the full answer?

Answer 1

Question

Chapter 23, Problem 19QS

To determine

Concept Introduction:

Variable overheads are the expenses which are incurred by the company other than direct material cost and direct labour cost. As the name denotes this cost is variable in nature. i.e.,it varies with the volume of production.

The difference between the Standard Variable Overhead and the Actual Variable overhead is the Variable Overheads variance.

Like Labour Cost Variance, Variable Overhead variance may be caused because of either change in rate per hour or change in number of hours from the standard time.

Thus Variable Overhead Cost Variance is the sum of Variable Overhead spending variance and Variable Overhead Efficiency Variance.

The following are the formulas for the same:

Variable Overhead Cost Variance (VOCV) = Variable Overhead spending variance + Variable

Overhead Efficiency Variance

Also, Variable Overhead Cost Variance (VOCV) = Standard Variable Overhead Cost(SVOC) − Actual
Variable Overhead Cost(AVOC)
Variable Overhead spending Variance = Standard Variable overheads for actual hours − Actual
Variable overhead cost
Variable Overhead Efficiency Variance = Standard Variable overhead cost − Standard variable

Overheads for actual hours

Variable Overhead Spending Variance and Efficiency Variance

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

What is the difference between a contra asset account and a liability?

Joe transferred land worth $200,000, with a tax basis of $40,000, to JH Corporation, an existing entity, for 100 shares of its stock. JH Corporation has two other shareholders, Ethan and Young, each of whom holds 100 shares. With respect to the transfer:a. Joe has no recognized gain. b. JH Corporation has a basis of $160,000 in the land.c. Joe has a basis of $200,000 in his 100 shares in JH Corporation. d. Joe has a basis of $40,000 in his 100 shares in JH Corporation. e. None of the above.

I need help with this general accounting problem using proper accounting guidelines.