Variable overhead efficiency variance, Cost Accounting

Variable Overhead Efficiency Variance

Budget for December 2003;

Shs.

Fixed Overheads

11,480

Variable Overheads

13,120

Labour Hours

3,280 hours

Standard Hours of Production

3,280 hours

Actual Results for December 2003

Shs.

Fixed Overheads

12,100

Variable Overheads

13,930

Actual Labour Hours

3,150/hours

Standard Hours of Production

3,280 hours

Variable Overhead Efficiency Variance = (actual labour hours x V.O.A.R) - (standard hour of production x V.O.A.R)

                                                     = (3,150 x 4) - (3,230 x 4)

                                                     = Shs.12,600 - Shs.12,920

                                                     = Shs.320  Favourable

The variance is favourable since we spent less than the standard cost.

Posted Date: 2/7/2013 7:13:11 AM | Location : United States







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