Overhead Variance

It is the difference between actual overhead incurred and the standard overheads. 

Formula 

Overhead variance = Actual overheads incurred - Standard overheads

Example

Following data is available for Alpha industry:

Standard cost

Overhead $83,900/-

Actual Cost

Overhead $70,500/-

Required: Calculate Overhead variance?

Solution/ Answer

Overhead variance = Actual overheads incurred - Standard overheads = 70,500 - 83,900 = $13,400 Favourable

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