Overhead Variances Homework Help

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What are Overhead Variances?

 

Apart from direct material cost and direct labour cost, if any other cost is being implied to the production, it comes under the category of overhead cost. The certain differences in between budgeted overhead expenses and the actual overhead expenses occurred during production is considered to be overhead variances. In this article for Overhead variances homework help we discuss various aspects of it.
 

Example for Overhead Variances Homework Help

 

Let’s suppose that there is a plant that manufacture toys. There, the cost of standard variable overhead to look at the indirect labour cost is 100 Rs. per hour. Assume the standard time to manufacture 1000 toys is 2000 hours. But the company took 200 hours extra to manufacture 1000 toys.
So
Unfavourable overhead variance = (2200-2000) *100
It is called unfavourable in our Overhead variances homework help article because the company mistaking more time to produce the toys than the expected ones.
The variance will be called favourable when the case is, that the company takes less hours to produce the expected number of toys.
 

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Types of Overhead Variances

 

In this article for Overhead variances homework help we discuss the following types of overhead expenses variances.
1. Variable overhead cost variance = (variable overhead recovered – actual variable overhead).
2. Variable overhead expenditure variance = (actual variable overhead – standard variable overhead).
3. Variable overhead efficiency variance = standard variable overhead rate/hour * (Actual hours – Standard hours for actual production)
 

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