The most common contributor to a variance between actual overhead and applied overhead is by operating at a different level of volume than the level used as a denominator in calculating the budgeted overhead rate.

Question

Quizplus · Accepted Answer

Operating at a different level of volume than the level used as a denominator can cause a variance between actual and applied overhead because the budgeted overhead rate is based on a specific volume level, and if the actual volume varies from that level, the overhead costs will also vary.

The Most Common Contributor to a Variance Between Actual Overhead