The document discusses manufacturing overhead variance calculations. It provides examples of calculating total, controllable, and volume variances given actual overhead costs, standard hours, budgeted overhead amounts, normal capacity hours and production levels. The total variance is the difference between actual overhead and applied overhead. The controllable variance is the difference between actual and budgeted overhead. The volume variance is based on fixed overhead rates and the difference between normal and actual capacity.

1. Manufacturing overhead variance
‫مباشرة‬ ‫الغير‬ ‫الصناعية‬ ‫التكاليف‬ ‫انحراف‬
• Total MO variance =actual overhead – overhead
applied
Volume overhead
variance
Controllable variance

2. Ex. In October, Roby Company reports 21,000 actual
direct labor hours, and it incurs $118,000 of
manufacturing overhead costs. Standard hours
allowed for the work done is 20,400 hours. The
predetermined overhead rate is $6 per direct labor
hour. Compute the total overhead variance.
Total MO VARIANCE = ACTUAL OVERHEAD –
OVERHEAD APPLIED
ACTUAL Overhead = 118000
Overhead applied = 20400 x 6 = 122400
Total MO Variance = 118000 – 122400 = 4400 F
‫مالئم‬ ‫انحراف‬

3. Some overhead data for Roby Company are given in above. In
addition, the flexible manufacturing overhead budget shows that
budgeted costs are $4 variable per direct labor hour and $50,000
fixed.
1-Compute the overhead controllable variance.
2-compute the overhead volume variance. Normal capacity was
25,000 direct labor hours.

4. Overhead controllable variance = actual
overhead – overhead budgeted
Actual overhead = 118000
Overhead budgeted = 50000 +( 4x 20400)=
131200
Overhead controllable variance = 118000 –
131200 = 13600 F ‫مالئم‬ ‫انحراف‬

5. overhead Volume variance = fixed rate*(normal
capacity hours – standard hour allowed)
Fixed rate = 50000 25000 = 2
Normal capacity hours = 25000 hours.
Standard hour allowed = 20400
Overhead volume variance = 2 x ( 25000 – 20400)
= 9200 U ‫مالئم‬ ‫غير‬
Total MO Variance = controllable variance + overhead
volume variance
13600 F + 9200 U = 4400 F

6. Ex. Manufacturing overhead data for the production
of Product H by Smart Company are as follows.
Overhead incurred for 52,000 actual direct labor
hours worked $263,000
Overhead rate $5 (variable $3; fixed $2) at normal
capacity of 54,000
direct labor hours
Standard hours allowed for work done 51,000
Instructions
Compute the total overhead variance.

7. Total overhead variance = actual overhead –
overhead applied
Actual overhead = 263000
Overhead applied = predetermined rate *
standard hours allowed
( 5x 51000) = 255000
Total overhead variance = 263000 – 255000 =
8000 U ‫مالئم‬ ‫غير‬

8. Ex. The information shown below was taken from the annual
manufacturing overhead cost budget of Samantha Company.
Variable manufacturing overhead costs $34,650
Fixed manufacturing overhead costs $19,800
Normal production level in labor hours 16,500
Normal production level in units 4,125
Standard labor hours per unit 4
During the year, 4,000 units were produced, 16,100 hours
were worked, and the actual manufacturing overhead was
$55,000. Actual fixed manufacturing overhead costs equaled
budgeted fixed manufacturing overhead costs. Overhead is
applied on the basis of direct labor hours.
Instructions
(a) Compute the total, fixed, and variable predetermined
manufacturing overhead rates.
(b) Compute the total, controllable, and volume overhead
variances.

9. A- total overhead rate = ( 34650 + 19800) 16500 =
54450 16500 = 3.3
Variable overhead pate = 34650 16500 = 2.1
Fixed overhead rate = 19800 16500 = 1.2
B- Total overhead variance = actual overhead – overhead applied
Actual overhead = 55000
Overhead applied = total overhead rate * standard hour allowed )
3.3 x( 4 x 4000))
( 3.3 x 16000) = 52800
Total overhead variance = 55000 – 52800 = 2200 U ‫مالئم‬ ‫غير‬

10. Overhead controllable variance = actual overhead
– overhead budgeted
Actual overhead = 55000
Overhead budgeted = 19800 + (2.1 x 16000)=
19800 + 33600 = 53400
Overhead controllable variance = 55000 - 53400 =
1600 U ‫مالئم‬ ‫غير‬

11. Overhead volume variance = fixed rate *( normal capacity
hurs.- standard hurs allowed )
Fixed overhead rate = 1.2
Normal capacity hours = 16500
Standard hurs. Allowed = 16000
Overhead volume variance = 1.2 x( 16500-16000)=
1.2 x 500= 600 U ‫مالئم‬ ‫غير‬
Total overhead variance = controllable variance + volume variance
1600 U + 600 U = 2200 U

12. Ex. Alona Company’s overhead rate was based on
estimates of $200,000 for overhead costs and 20,000
direct labor hours. Alona’s standards allow 2 hours of
direct labor per unit produced. Production in May was
900 units, and actual overhead incurred in May was
$19,000. The overhead budgeted for 1,800 standard
direct labor hours is $17,600 ($5,000 fixed and $12,600
variable).
Instructions
(a) Compute the total, controllable, and volume variances
for overhead.

13. Total manufacturing overhead = actual overhead –
overhead applied
Actual overhead = 19000
Overhead applied = predetermine overhead rate *
standard hours allowed
Predetermined rate = 200000 20000= $ 10
Standard hours allowed = 2 x 900 = 1800 hus.
Total manufacturing overhead = 19000 – ( 10x1800) =
19000 – 18000 = 1000 u ‫مالئم‬ ‫غير‬
Overhead controllable variance = actual overhead –
overhead budgeted
Overhead budgeted =17600
Overhead controllable variance = 19000 – 17600 = 1400 u
‫مالئم‬ ‫غير‬

14. Overhead volume variance = fixed rate * ( normal capacity
hours – standard hours allowed)
Normal capacity hour = 20000 12= 1666.6
Fixed rate = 5000 1666.6= 3
Overhead volume variance = 3 x (1666.6-1800)= 400 F
‫مالئم‬ ‫انحراف‬
Overhead volume variance = controllable variance +
volume overhead
1400 U + 400 F= 1000 U

15. Thank you