The difference between actual overhead costs incurred during a period and the overhead in the flexible budget based on the output for the period is called the:
A) Total overhead spending variance.
B) Total overhead efficiency variance.
C) Production-volume variance.
D) Overhead flexible-budget variance.
E) Total overhead variance.

Question

Quizplus · Accepted Answer

The overhead flexible-budget variance represents the difference between actual overhead costs and the overhead costs that were budgeted based on the flexible budget, which adjusts for changes in activity levels. This variance can be further analyzed into spending and efficiency variances, but the initial difference between actual and budgeted overhead costs is captured by the flexible-budget variance. The production-volume variance is a separate variance that measures the difference between the budgeted overhead costs at one level of activity and the budgeted overhead costs at a different level of activity. The total overhead variance is a general term that could refer to any variance related to overhead costs.

The Difference Between Actual Overhead Costs Incurred During a Period