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There are primarily 2 pointers that are associated with total variable overhead variance- variable overhead spending variance and variable overhead efficiency variance. Students can surely try our variable overhead spending variance homework help. We at myhomeworkhelp.com provide precise and comprehensive solutions to our students.
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What is this variance?
There is a certain amount of difference when indirect materials that are usedin production, their costs are counted. There is a certain monetary amount that is available on indirect material that is usedon production process as well as costs associated with variable overheads. There is a certain amount of discrepancy that occurs between indirect material and their costs as well as budgetary amount that is given. This type of variance can also be favorable and unfavorable.
In the case of a favourable variance, actual costs of materials that are procured via indirect modes,are less in comparison to standard variable overhead. In contrast, there are times when original costs are comparatively high when placed against budget cost amounts.
A favourable variable overhead spending variance shows that a business spent lower amount compared to total amount.
Under what conditions favorable variance can happen?
- In case there is a sudden growth it could result in excess of material from indirect sources on the industry.
- A reduction in price levels of supplies coming from other sources.
- Cost control in a more efficient way. For instance, consuming electricity in an optimizing way by installing energy saving equipment.
- There is a very big error in planning that could lead to a total disruption in that industry itself.
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