body {
font-family: -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif;
line-height: 1.6;
color: #333;
max-width: 800px;
margin: 0 auto;
padding: 20px;
}
.calculator-wrapper {
background-color: #f8f9fa;
border: 1px solid #e9ecef;
border-radius: 8px;
padding: 25px;
margin-bottom: 40px;
box-shadow: 0 4px 6px rgba(0,0,0,0.05);
}
.calc-header {
text-align: center;
margin-bottom: 25px;
color: #2c3e50;
}
.input-group {
margin-bottom: 20px;
}
.input-group label {
display: block;
margin-bottom: 8px;
font-weight: 600;
color: #495057;
}
.input-group input {
width: 100%;
padding: 12px;
border: 1px solid #ced4da;
border-radius: 4px;
font-size: 16px;
box-sizing: border-box;
}
.input-group input:focus {
border-color: #4a90e2;
outline: none;
box-shadow: 0 0 0 3px rgba(74, 144, 226, 0.1);
}
.calc-btn {
width: 100%;
background-color: #2c3e50;
color: white;
border: none;
padding: 14px;
font-size: 16px;
font-weight: bold;
border-radius: 4px;
cursor: pointer;
transition: background-color 0.2s;
}
.calc-btn:hover {
background-color: #34495e;
}
#result-area {
margin-top: 25px;
padding: 20px;
background-color: #ffffff;
border-radius: 4px;
border-left: 5px solid #ced4da;
display: none;
}
.result-row {
display: flex;
justify-content: space-between;
margin-bottom: 10px;
padding-bottom: 10px;
border-bottom: 1px solid #eee;
}
.result-row:last-child {
border-bottom: none;
margin-bottom: 0;
padding-bottom: 0;
}
.result-label {
font-weight: 600;
color: #555;
}
.result-value {
font-weight: 700;
font-size: 1.1em;
}
.status-favorable {
color: #27ae60;
font-weight: bold;
}
.status-unfavorable {
color: #c0392b;
font-weight: bold;
}
.article-content h2 {
color: #2c3e50;
margin-top: 30px;
border-bottom: 2px solid #eee;
padding-bottom: 10px;
}
.formula-box {
background-color: #e8f4fd;
padding: 15px;
border-radius: 5px;
font-family: monospace;
font-size: 1.1em;
margin: 20px 0;
text-align: center;
border: 1px solid #b6d4fe;
}
.example-box {
background-color: #fff3cd;
padding: 15px;
border-radius: 5px;
border: 1px solid #ffeeba;
}
@media (max-width: 600px) {
.calculator-wrapper {
padding: 15px;
}
}
Understanding Variable Overhead Rate Variance
The Variable Overhead Rate Variance (VORV), also known as the Variable Overhead Spending Variance, is a key metric in standard costing and managerial accounting. It measures the difference between what the variable overhead actually cost per hour (or unit of activity) versus what it was expected (standard) to cost, multiplied by the actual activity level.
This variance helps management identify whether they are spending more or less on variable overhead items (such as indirect materials, utilities, or maintenance) relative to the actual hours worked.
The Formula
The calculation can be approached in two ways, both yielding the same result:
Variance = (Actual Rate – Standard Rate) × Actual Hours
Alternatively, if you do not calculate the specific actual rate first:
Variance = Total Actual Variable Overhead – (Standard Rate × Actual Hours)
Where:
- Actual Hours (AH): The actual labor or machine hours used during the period.
- Actual Rate (AR): Total Actual Variable Overhead divided by Actual Hours.
- Standard Rate (SR): The budgeted variable overhead rate per hour.
Interpreting the Results
The variance outcome tells a story about cost control:
-
Unfavorable Variance (Positive Result):
This occurs when the Actual Rate is higher than the Standard Rate. It means the company spent more on variable overheads for the hours worked than budgeted. Causes might include rising prices for indirect materials or inefficient use of supplies.
-
Favorable Variance (Negative Result):
This occurs when the Actual Rate is lower than the Standard Rate. It indicates the company spent less on variable overheads than expected for the hours worked, suggesting cost savings.
Example Calculation
Scenario: A manufacturing plant budgets its variable overhead at a standard rate of $5.00 per machine hour.
During the month, the machines ran for 2,000 actual hours. The total bill for variable overhead expenses (lubricants, electricity, etc.) came to $10,500.
Step 1: Determine Actual Rate
$10,500 ÷ 2,000 hours = $5.25 per hour.
Step 2: Apply Formula
($5.25 – $5.00) × 2,000 hours
$0.25 × 2,000 = $500
Result: Since the Actual Rate ($5.25) was higher than the Standard Rate ($5.00), the variance is $500 Unfavorable.
Common Causes of Variance
Unfavorable variances often stem from increases in the market price of indirect materials, poor maintenance leading to higher energy consumption, or waste.
Favorable variances might result from bulk buying discounts on supplies, lower energy rates, or improved efficiency in utility usage per hour.
function calculateVariance() {
// Get input elements
var actualHoursInput = document.getElementById('actualHours');
var totalOverheadInput = document.getElementById('totalActualOverhead');
var standardRateInput = document.getElementById('standardRate');
// Parse values
var ah = parseFloat(actualHoursInput.value);
var totalOverhead = parseFloat(totalOverheadInput.value);
var sr = parseFloat(standardRateInput.value);
// Result container
var resultArea = document.getElementById('result-area');
var resActualRate = document.getElementById('resActualRate');
var resDiff = document.getElementById('resDiff');
var resVariance = document.getElementById('resVariance');
var resStatus = document.getElementById('resStatus');
// Validation
if (isNaN(ah) || isNaN(totalOverhead) || isNaN(sr)) {
alert("Please enter valid numbers in all fields.");
return;
}
if (ah 0 ? "#c0392b" : (variance 0) {
resDiff.innerHTML = "+" + formatMoney(rateDifference) + " (Over)";
resDiff.style.color = "#c0392b";
} else if (rateDifference 0.001) { // Floating point tolerance
resStatus.innerHTML = "UNFAVORABLE";
resStatus.className = "result-value status-unfavorable";
} else if (variance < -0.001) {
resStatus.innerHTML = "FAVORABLE";
resStatus.className = "result-value status-favorable";
} else {
resStatus.innerHTML = "No Variance";
resStatus.className = "result-value";
resStatus.style.color = "#555";
}
}