Variable Overhead Expenditure Variance
|
Budget for December 2003;
|
Shs.
|
|
Fixed Overheads
|
11,480
|
|
Variable Overheads
|
13,120
|
|
Labour Hours
|
3,280 hours
|
|
Standard Hours of Production
|
3,280 hours
|
|
Actual Results for December 2003
|
Shs.
|
|
Fixed Overheads
|
12,100
|
|
Actual Variable Overheads
|
13,930
|
|
Actual Labour Hours
|
3,150/hours
|
|
Standard Hours of Production
|
3,280 hours
|
= Actual Variable Overheads - (Actual labour hours x V.O.A.R)
= Shs.13, 930 - (3,150 x 4)
= Shs.13, 930 - Shs.12,600
= Shs.1, 330 Unfavourable
The variance is unfavourable since we spent more than allowed.