Concept explainers
Concept Introduction:
Variable
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
To Determine: Variable Overhead Spending Variance and Efficiency Variance
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Fundamental Accounting Principles -Hardcover
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