Variable Overhead Variance (VOHV)

VOHV is defined by ICMA, London, as 'the variation between the standard variable production overhead absorbed in the production achieved, whether completed or not, and the actual production overhead'.  This variance can be split into 2 parts -

i)  Variable Overhead Efficiency Variance and

ii)  Variable Overhead Expenditure Variance.

VOHV=  (Actual hours worked x Standard variable overhead rate per hour)- Actual variable over heads

i) Variable overhead variance

It is the variation between actual overhead expenditure incurred and the standard variable overheads set in for a particular period.

Variable overhead variance = (Standard variable overhead) - (Actual variable overhead)

ii) Variable Overhead Efficiency Variance

It defines the effect of change in labour efficiency overheads recovery.

Variable Overhead Efficiency Variance = Standard rate (Standard quantity - Actual quantity) where Standard rate = (Standard time for actual output - Actual time)