OVERHEAD COST VARLANCES

* Overhead coSt vanance can be mainly divided into

two parts. They ar
o Variable overhead cost Variance
0a Med overhead cost variance

Variable OVer he ad Cos t

Varia ce

Variable oH cost AVoH SuoHFor áctual

Varlance production Production

* I 6 ac tual variable o4 is greater than standard

VAria0ce S C Verse and viSe versa.
CoS pro uC Li0D n e

Jariable oUer head Cost can be divided nto parts

Overhead apendítare Variance

o Variable
ariable overheas EF FICiency VariaDce.
o27

o Variabl e overhead Expendi+are variance

Variable oHEV AVOH SVOH For acual hours worked J|

actu al variable Overhe ad is greater than standar d

For acEual hours wOrked. The Variance is
Variable o Nerhead
aduerse ice Versa.
 L

02 Varia ble overhea d Fficiency Varian ce

Varia ble oH SvOH For svoH hours f

eFficie ncg variance actual haurs worked actual outpu

FiAed Overhead Variance

f e d overead Aatual Fixed Slandard Fiaed

varia0Ce OH for actual
Produ ction

+TE 4he AFOA s less than the SFOH the variaOce is

Fav ouiable g Uise Versa.

Fimed óverhead varian ce Can be divided nlLo t0O

Parts
o ixed DH
Enpendi ture varian ce
o ia ed oH volu me variance.

o17 Fixed Overhead

Expendi ture Variance

fid ed OHEV AFOH SeOH

TF the actual is greater than the SAandard Variane

is adverse and vise Versa
 DELe:

02 Fiaed overhe a d Vo lume Varian cee

Fixee overhead z
Budgeted Fined- Standa rd Fiaed
olum varince
O4 on actual

produc tHon.

*
f the BFOH 1S grea ter than the seO14 on a c t u a l

Proda ctlon 0 the Variance is aduerse vice versa.

Advance Varlance

FOH Volume may be class iFied lo to the Abree Sub

varlances ac Eollows
oy Calender variance

0 Capacl y Vari ance

03 EFficiency Vauni ance.

Overhead Cost Var lance

Fined OH Varian ce
Variable OHC varlance

Flxed 0HEV flxed oHVV

Variable OHEV Variable OHEV
 Example 04
From the following information caleulate VOH cost variances.
Budgeted output 5000 units Cs H)
Budgeted hours 10000(sN)
v
Cs
Budgeted variable overheads Rs. 2000
Actual variable overheads Rs. 3000
Actual output 4000 units
Actual hours 12000

Working

SVOH per hour 200 0 2

0, 000

SvoH per unit 2000 O 4

5o00

Voriab le ou AVOH SVOH FOY actual production

cOS Nariance
3000 (o.4 X409o)
1400CA)

F the acAua variable oH iS greater than

for actual hours
workiY)a, the variance is advene
and V Ise versa.

Variable ou (Avot SvoH per aciual brs worki

expendt ure voriance 3000 Co x 12, o00
GO0 CA)

T octual varlable oH S grea-Ler han svo

For actual hrs working, the variance is
Vis e Versa.
adversee
and e
 Vo4EFficiency Svo For S Vol4 brs or
VariaOCe actual hrs acFual outpu-

24400 Co 4 x
4000
2 400 1600
89 CA)

TFthe For actual S greater than voH

hrs
For actual output the variance is adverse

Example 05:
From the following information calculate FOH cost variances.
Budgeted output 5000 units
Budgeted hours 10000
Budgeted FOH overheads Rs. 3000
Actual FOH Rs. 3600
Actual output 4800 units
Actual hours 12000

Workin

SoH COSt per unit 3000

5000

sFOH Ccos4 per br 3000

O3/

FO4 Cos+ yariance z Actual FOH SFOH For actua l

Produc
3600 o . 6 x 4 800)
30 CAD

*TP AfOH is greaier thao Sfol for aciual Product io n,

Varlan ce S aduerse and v13e VeTS e.
 SEOH
AFOW
FOH expenditure
Variance
3600 300 0

600 CA)

is greaHer han fOH varianeig

AFoH

adverse

Budge t FOH SFOH On actua

FoHFoH Volume
Productio0o
Variance
3000 Co.6X 480)
3000 286
20 CA

F budgeied FOH varlance greater 4hao seo4 on

a c 4ua producion, var la n ce iS aduerse.

FoHC varian ce FOH eApenditu re FOH valu me

Varian ce Varian ce
6o0M)+ 120CA)
3 o CA)

TE octual S
FOH EMpenditute var iance fs greater
thao FoH volume the variance.
 aciual
SvoH For
Variable cos+ AVOH
Production
var lance

SVo4 For actual

Variable oHeV AvoH -

hrs worked

SvoH hrs for

SvOH For
Varlable OH z
a Ctue outpt|
actual hrs Worked
EFFiciency yarlance

fixed OH AFoH SFOH For at tual

Pro duction.

variance

Fixed o4 AFOH SFOH

variance
Expendi tu re

on actual
Cixed OH Volume Budgeted FOH - SFOH
Producion.

variance