Variable Overhead

[annieef]

Does anyone have a good example of the use of Variable overhead in cost accounting?

Thanks in advance,
Annie

 

[erpconsultant]

Hi,

Variable overhead is something which is not a direct expense to build a product. The amount is consumed indirectly.
I can give you some examples of Variable overheads:
1. power consumption of a machine (because it will vary based on the product and other parameters.)
2. Consumables (such as oil, grease) that will depend on the usage of the machineries.

I hope you ve got it.

erpconsultant