Page 384 - F2 - MA Integrated Workbook STUDENT 2018-19

Chapter 15

Variable overhead variances

6.1 Calculations

Actual Hours × Actual Rate

Expenditure variance

Actual Hours × Standard Rate Total variance

Efficiency variance

Standard Hours × Standard Rate

There is no need to worry about idle time. The hours here, are the hours worked.

Unless told otherwise, assume that the hours used are the same as the labour hours.

Variances will be favourable if Actual < Standard and adverse if Actual > Standard

Test your understanding 7

The standard cost card for product P shows:

Variable production overheads 3 hours at $2 per hour $6 per unit.

Last period, 670 units of P were produced and actual results were:

Variable production overheads 2,090 hours $5,434

The variable overhead variances for the period are:

Variable overhead expenditure variance $ A F

Variable overhead efficiency variance $ A F

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