Overhead Variance - Four Variance Method

This is the last lecture on Variance Analysis

In the four Variance method following variances are calculated

  1. Spending Variance
  2. Idle Capacity Variance
  3. Variable Efficiency Variance
  4. Fixed Efficiency Variance.

The spending variance and idle capacity variance are the same as in Three Variance Method. The formula for all of these four variances are given below.

You can click on the image below to enlarge the view.

four variance method Overhead Variance   Four Variance Method.

Comments are closed.