Which of the following is used to calculate total variable overhead variance where voh = variable overhead, svor = standard variable overhead rate, sh = standard hour allowed, and ah = actual direct labor hours used?

a. total voh variance = variable voh – svor × ah
b. total voh variance = fixed voh – svor × ah
c. total voh variance = standard voh – svor × sh
d. total voh variance = actual voh – svor × sh
e. none of these choices are correct.

See below.

Explanation:

Total Variable over head variance = Spending variance + Efficiency variance

Total Spending variance = VOH - SVOR × AH

Total Efficiency variance = SVOR * ( AH - SH)

Assuming we only want total spending variance then option A is correct, however if we assume total overhead variance is required option E would be correct as we also need to account for the efficiency variance of overhead as per the difference between actual and standard hours worked.

Hope that helps.

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