Overhead cost variance is:
A) The costs that should be incurred under normal conditions to produce a specific product (or component) or to perform a specific service.
B) The difference between the overhead costs actually incurred and the overhead budgeted at the actual operating level.
C) The difference between the actual overhead incurred during a period and the standard overhead applied.
D) The difference between the total overhead cost that would have been expected if the actual operating volume had been accurately predicted and the amount of overhead cost that was allocated to products using the standard overhead rate.
E) The difference between actual and budgeted cost caused by the difference between the actual price per unit and the budgeted price per unit.

Question

Quizplus · Accepted Answer

Overhead cost variance is the difference between the actual overhead incurred during a period and the standard overhead applied. This variance helps companies to identify whether they are over or under allocating their overhead costs. The standard overhead is calculated based on the predetermined overhead rate per unit, and the actual overhead is the actual cost incurred during a specific period. The variance can be unfavorable or favorable, depending on whether the actual overhead cost is higher or lower than the standard overhead applied.

Overhead Cost Variance Is