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What is Variable Overhead Cost Variances?

Often, it happens that the variable overhead absorbed does not match to the actual overhead incurred. The difference between the two entities is known as the Variable Overhead Cost Variances. It indicates the under or over absorbed variable overhead.

What is the importance of planning and controlling of overhead costs?

Planning and controlling overhead costs is one of the major currents challenges which the managers are facing. Energy, machine maintenance, indirect materials, and indirect materials are responsible for variable overhead costs. While making a budget, a manager must allot correct amount for each category. So that output costs do not exceed the budget.

Variable overhead cost variances homework help for making effective planning for variable overhead costs.

What planning can be done?

  • For an effective planning of variable overhead costs, we suggest our students to consider only those variable overhead activities which add value for customers using the service or product.

Formula for Variable Overhead Cost Variances

Absorbed cost – Actual Cost

Our variable overhead cost variances homework help service will not be helpful in the true sense, until and unless students understand what is absorbed cost and what is actual cost.

  • Absorbed Cost-

Problem solving questions usually contain absorbed cost as a calculated figure. In that case, you do not have to concern about the rate of absorption unless you need it specifically in any calculation.

In case,  a question does not contain the absorbed cost then you have to find out the cost.   To calculate the value you have to use the rate of absorption which was used in the context to absorbed overheads.  You can calculate absorption cost on the basis of output, inputs,   and periods.

  • Actual Cost-

You can determine the actual cost incurred from the financial information. If you do not know the actual variable overhead cost then you can calculate it on the basis of actual me a sure of the factor used for absorbing overheads, such as operational hours, output, etc.

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