**Variable Overhead:**

Variable overhead refers to the indirect costs that vary in proportion to the level of production or the number of units produced. These costs are not directly tied to a specific product or service but are incurred as a result of the production process. Variable overhead costs can fluctuate with changes in production volumes, such as raw material usage, labor hours, or machine hours.

**Examples of variable overhead costs include:**

1. Direct labor costs: Wages and benefits of production workers who are directly involved in the manufacturing process.

2. Raw material costs: The cost of materials used in the production process, such as steel, plastic, or chemicals.

3. Utilities: Variable costs associated with electricity, water, gas, or heating oil used in the production facility.

4. Maintenance and repair costs: Expenses related to the upkeep and repair of production equipment.

5. Packaging and shipping costs: Expenses incurred to package and transport finished goods to customers.

**Fixed Overhead:**

Fixed overhead refers to the indirect costs that remain constant regardless of the level of production or the number of units produced. These costs are not affected by changes in production volumes and are incurred regardless of whether any production activity takes place. Fixed overhead costs are often referred to as "period costs" as they are incurred over a specific period of time.

**Examples of fixed overhead costs include:**

1. Rent and lease expenses: The cost of renting or leasing the production facility or office space.

2. Depreciation: The gradual loss in value of long-term assets, such as machinery or buildings, over their useful life.

3. Insurance premiums: The cost of insuring the production facility, equipment, and employees.

4. Salaries of administrative staff: The wages and benefits of employees who provide administrative support and do not directly participate in the production process.

5. Property taxes: Taxes levied on the production facility or office space.

**Distinguishing Factors:**

The key differences between variable overhead and fixed overhead are as follows:

1. Variability: Variable overhead costs vary with changes in production volumes, while fixed overhead costs remain constant.

2. Relationship to production: Variable overhead costs are tied to the production process and can be directly attributed to specific units or batches of products. In contrast, fixed overhead costs are not directly tied to production and are incurred regardless of the level of activity.

3. Control: Variable overhead costs can be managed by adjusting production levels, whereas fixed overhead costs are relatively fixed and cannot be easily controlled in the short term.

4. Allocation: Variable overhead costs are allocated to specific products or batches based on the level of activity, while fixed overhead costs are often allocated based on predetermined allocation methods, such as direct labor hours or machine hours.

By understanding the distinction between variable overhead and fixed overhead, businesses can better analyze and control their costs, make informed pricing decisions, and improve overall profitability.