Definition for variable-overhead-spending-variance

Definition of Variable Overhead Spending Variance

Variable Overhead spending variance is the product of actual units of the allocation base of variable overhead and the difference between standard variable overhead rate and actual variable overhead rate.

Explanation of Variable Overhead Spending Variance

It is calculated by deducting actual variable overhead rate from standard variable overhead rate and multiply it with actual units of allocation base.

When standard variable overhead application rate is more than actual variable overhead rate than a positive value of variable overhead rate is obtained. When actual variable overhead rate exceeds standard variable overhead rate than a negative value of variable overhead rate is obtained. Thus a positive value of variable overhead spending variance is favorable and a negative value is unfavorable.

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