Question

What is the formula of price variance and efficiency variance for Manufacturing Overhead (VMO and FMO) ? Thank You...

Answer 1

Variable Overhead Efficiency Variance = (Actual direct-labor hours - Standard direct-labor hours) * Standard variable overhead rate

Variable Overhead Spending Variance = (Actual variable overhead rate - Standard variable overhead rate) * Actual direct labor hours

Fixed Overhead Spending Variance = Actual fixed overhead costs - Budgeted fixed overhead costs

Fixed Overhead Efficiency Variance = (Actual labor-hours - Standard labor-hours) * Fixed overhead rate per hour