Variable overhead expenditure variance
The variable overhead expenditure variance compares actual variable overhead with the standard variable rate applied to actual hours or the specified activity base. With favourable-positive convention it is standard rate × actual activity − actual overhead. It identifies a spending-rate difference separately from efficiency measured against standard activity for actual output. Causes may include input prices, utility rates or the suitability of the chosen activity driver.
Worked example
Actual hours are 1,000, standard variable overhead $3 per hour and actual overhead $3,200. Expenditure variance is $200 adverse.
Common mistake
Do not use standard hours for actual output here; that would mix expenditure and efficiency effects.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | MA | Direct | September 2026–June 2027 |
| FIA | FMA | Direct | September 2026–June 2027 |