ECONOMICS

Detailed explanation-1: -The formula for this variance is:(standard hours allowed for production – actual hours taken) × standard overhead absorption rate per hour (fixed or variable).

Detailed explanation-2: -Expenditure variance = Budgeted overheads-Actual overheads. Volume variances = Recovered overheads-Budgeted overheads.

Detailed explanation-3: -Variable Overhead Spending Variance is the difference between what the variable production overheads actually cost and what they should have cost given the level of activity during a period. The standard variable overhead rate is typically expressed in terms of machine hours or labor hours.

Detailed explanation-4: -Formula for Variable Overhead Cost Variance We can calculate the Standard Variable Overhead for Actual Production using the following formula = Actual Output Units * Standard Rate per Unit. We can get the information on the actual variable overhead from the financial statements.