The difference between total factory overhead cost incurred during a period and the total standard factory overhead cost assigned to production of the period is the ________:
A) Flexible-budget variance
B) Production-volume variance
C) Total factory overhead variance
D) Overhead efficiency variance
E) Total overhead spending variance

Question

Quizplus · Accepted Answer

The difference between total factory overhead cost incurred during a period and the total standard factory overhead cost assigned to production of the period is known as the total factory overhead variance, which is the difference between the actual overhead cost and the budgeted overhead cost. The flexible-budget variance measures the difference between the actual overhead cost and the flexible budget cost. The production-volume variance measures the impact of the difference between the actual and budgeted production volume on overhead costs. The overhead efficiency variance measures the difference between the actual hours worked and the standard hours allowed for the work performed. The total overhead spending variance measures the difference between the actual overhead cost and the budgeted overhead cost.

The Difference Between Total Factory Overhead Cost Incurred During a Period