The variable overhead variance is the difference between the variable overhead cost actually incurred and the cost which should have been incurred for the actual hours worked. This assumes that variable overheads are directly attributable to labour hours.
Actual expenditure – ( Standard hours worked x Variable Overhead rate )
The variable overhead efficiency variance is the difference between the amount of overheads recovered based on the standard hours of production and the amount which should have been recovered if the actual hours worked had been at standard efficiency. ( Actual hrs. worked – Standard hrs. worked ) x Variable Overhead rate
Total Variable O’H Variance = Actual Variable O’H cost – Standard Variable O’H cost
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