How do you calculate variable overhead efficiency variance?

The formula for this variance is:(standard hours allowed for production – actual hours taken) × standard overhead absorption rate per hour (fixed or variable). (standard hours allowed for production – actual hours taken) × standard overhead absorption rate per hour (fixed or variable).

What does the variable overhead efficiency variance claim to measure quizlet?

When overhead is applied on the basis of direct labor hours, the variable overhead efficiency variance always has the same sign as the labor efficiency variance. The volume variance is often interpreted as a measure of capacity utilization.

How do you find variable overhead variance?

The variable overhead rate variance is calculated as (1,800 × $1.94) – (1,800 × $2.00) = –$108, or $108 (favorable). The variable overhead efficiency variance is calculated as (1,800 × $2.00) – (2,000 × $2.00) = –$400, or $400 (favorable).