Underapplied and overapplied fixed overhead has two components: 1) a production-volume variance, and 2) a fixed-overhead flexible-budget variance.

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Underapplied and overapplied fixed overhead are generally attributed to two components: 1) a production-volume variance, which is related to the actual number of units produced versus the budgeted number of units, and 2) a fixed-overhead flexible-budget variance, which is related to the difference between actual fixed overhead costs and the budgeted amount based on the flexible budget.

Underapplied and Overapplied Fixed Overhead Has Two Components: 1) a Production-Volume