The flexible overhead budget is a tool that can be used for controlling overhead costs. As for direct materials and labour, there are numerous levels of analysis.
Separate analysis is undertaken for variable and fixed overhead variances.
Calculate the budgeted variable overhead rate. Reflects the efficiency with which the cost driver is used. There is never an efficiency variance for fixed overhead as managers can not be more or less efficient in dealing with a fixed amount. The fixed overhead flexible budget variance and the fixed overhead spending variance are identical, given the previous discussion. It is simply the difference between the actual results and the budgeted amount.