variable production overhead total variance

Definition

The difference between the actual cost of manufacturing a number of units and the budgeted cost of manufacturing the units, in terms of variable production overhead. For example, consider a manufacturing company which budgeted expenditures of $10,000 to produce 1,000 units of product ($10/product). After production was complete, the company realized a cost of $12,500 for 1,000 units ($12.50/product). The variable production overhead variance was $2,500 ($12,500-$10,000).