Learning Objective 08-P4: Compute overhead controllable and volume variances. Overhead variances are due to differences between the actual overhead costs incurred and the overhead applied to production. The overhead controllable variance equals the actual overhead minus the budgeted overhead. The volume variance equals the budgeted fixed overhead minus the applied fixed overhead.

 Learning Objective 08-P4: Compute overhead controllable and volume variances.

Overhead variances are due to differences between the actual overhead costs incurred and the overhead applied to production. The overhead controllable variance equals the actual overhead minus the budgeted overhead. The volume variance equals the budgeted fixed overhead minus the applied fixed overhead.

 

Knowledge Check 01
 
An overhead variance report includes: (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

 


Explanation
Knowledge Check 01
 
An overhead variance report includes columns for the flexible budget including variable and fixed costs; actual results for variable and fixed costs; and variances for variable and fixed costs. It is prepared so that management can view and isolate reasons for the variances.