Spending Variance

1. The spending variance is the actual overhead less the budget based on the actual hours worked. If variable overhead only is being analyzed, the formula can be expressed as the actual hours times (the difference between the actual rate and the standard rate), and the formula corresponds to the direct material price variance and the direct labor rate variance. See also direct material price variance and direct labor rate variance and efficiency variance and budget variance and volume variance. Actual amount of overhead incurred less the expected amount based on the flexible budget for actual inputs.