Fixed Overhead Efficiency Variance Formula

Fixed Overhead Efficiency Variance Formula

Fixed overheads efficiency Variance is difference between standard hr and actual hour taken by the production and such difference is measured at standard rate.

Fixed overhead efficiency variance = Standard rate (Standard hour – Actual Hrs)

Example

Unit produced = 5000

Standard hrs = 5 Hr per unit

Actual Hours = 24,000

Standard Rate = $ 6

Solution

Standard Hours = Production x standard hours =

5000 units x 5 hr= 25,000 hrs

Fixed overhead efficiency variance = Standard rate (Standard hour – Actual Hrs) 

= $ 6 x (25,000-24,000)

= $ 6 x 1000

= $ 6000