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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
Actual Results for December 2003
12,100
13,930
Actual Labour Hours
3,150/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.
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