The normal capacity of the Assembly Department is 25,000 machine hours per month. At normal capacity, the budgeted factory overhead was estimated to be $480,500 of which the variable factory overhead rate is $5.50 per machine hour. During April, the department operated at 24,600 machine hours, with total actual factory overhead of $480,000. The actual variable rate is 5.30 per hour. The number of standard machine hours allowed for the production actually attained is 24,850.

V. OH Spending Variance V. OH Efficiency Variance

Overhead Variance Handout

FIXED OVERHEAD
Actual	BUDGET	Standard
Actual Quantity		Budgeted QTY (normal capacity)		Standard Quantity ALLOWED
Actual $		Stand $		Stand $
Total Actual		Total Flex		Total Standard
	F. OH Spending Variance Volume Variance

Total Overhead
Actual			Standard
Total OH				Total OH
	Total Overhead Variance

4 FACTOR	Variance $, F or U	Investigation required or Investigation NOT required
Variable OH Spending
Fixed OH Spending
Variable OH Efficiency
Volume
3 FACTOR
OH Spending
Variable OH Efficiency
Volume
2 FACTOR
Budget Variance
Volume
1 FACTOR

The point an amount becomes material and would require further investigation is if the variance is greater than either $1,500 Favorable or $1,000 unfavorable