Page 116 - P1 Integrated Workbook STUDENT 2018

Chapter 7

Variable overhead variances

5.1 Calculations

SHSR

Efficiency variance

AHSR Total variance

Expenditure variance

AHAR

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.

5.2 Causes of variable overhead variances

 Expenditure variances are often caused by changes in machine running costs
(for example, if electricity rates have changed).

 Efficiency variances have similar causes to those for a direct labour efficiency
variance.

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