The overhead variance is the difference between actual total overhead and the standard overhead budgeted.
What is Overhead Variance?This is a measure of the difference between what a company expected to spend on overhead and what it actually spent.
The overhead variance is calculated by subtracting the actual total overhead from the standard overhead budgeted.
If the actual total overhead is higher than the standard overhead budgeted, then the overhead variance is unfavorable or adverse. Conversely, if the actual total overhead is lower than the standard overhead budgeted, then the overhead variance is favorable.
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The overhead variance is the difference between actual total overhead and the standard overhead budgeted. Overhead variance can be calculated by subtracting the actual total overhead from the standard overhead budgeted.
It is important to note that overhead costs are indirect costs that are not directly associated with production.For instance, rent, utilities, and office supplies are all overhead expenses. The variance between actual and standard overhead costs is determined to evaluate the effectiveness of the overhead budget. If actual overhead costs are less than the standard overhead budgeted, the difference is known as a favorable variance. When actual overhead costs are greater than the standard overhead budgeted, the difference is known as an unfavorable variance.
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