overhead variance- The difference between the actual overhead incurred by the company and the standard overhead estimated by the company called the overhead variance.

1. Presentation on
Overhead variance
Submitted to – Submitted By-
Mr. Sandeep Bisht Sir Shaifali Pandey
MBAII Sem

2. An overhead cost variance is the difference
between the amount of overhead applied
during the production process and the
actual amount of overhead costs incurred
during the period.
E.g: Effieciency variance and volume
variance.

3. 1- Variable overhead: Variable overhead is the
indirect cost of operating a business, which
fluctuates with manufacturing activity.
Eg: Electric bill and water bill.

4. A) Variable overhead cost variance
This is the difference between the standard
variable overhead for actual production and the
actual variable overhead incurred.
Formula - Actual Output x Standard Variable
Overhead Rate – Actual Variable Overheads

5. B) Variable Overhead Expenditure Variance
It is the difference between standard variable
overheads allowed for actual hours worked and
the actual variable overhead incurred.
Formula - Actual hours worked x Standard
variable overhead rate per hour – Actual
variable overhead

6.  The difference between the standard fixed overhead
for actual output (i.e., fixed overhead that has been
recovered) & the actual fixed overhead which has
been incurred, is known as fixed overhead cost
variance.
 Eg: Rent, sallaries, insurance.

7. A) Fixed overhead cost variance
It is that portion of overhead cost variance
which is due to over absorption or under
absorption of overhead for the actual
production.
Formula: Actual Output x Stanadard Fixed
Overhead Rate per unit – Actual Fixed
Overheads

8. This Variance is the difference between the
budgeted fixed overheads and the standard
fixed overheads recovered on the actual
production.
Formula : Volume Variance = Actual Output x
Standard Rate – Budgeted Fixed Overheads
(or) Standard Rate (Actual Output – Budgeted
Output)

9. For example: a company budgets for the
allocation of 25,000 of fixed overhead costs to
produced goods at the rate of ₹ 50 per unit
produced, with the expectation that 500 units
will be produced.
However, the actual number of units produced
is 600, so a total of 30,000 of fixed overhead
costs are allocated. This creates a fixed
overhead volume variance of 5,000