In a standard costing system, the total manufacturing overhead variance is measured as
A) the difference between applied overhead based on actual output and actual overhead cost incurred.
B) the difference between actual overhead costs for two subsequent periods.
C) the difference between overhead costs in the flexible budget for two subsequent periods.
D) the difference between standard overhead applied and the overhead cost in the flexible budget.

Question

Quizplus · Accepted Answer

The total manufacturing overhead variance is measured as the difference between applied overhead based on actual output and actual overhead cost incurred. This is because standard costing systems use predetermined overhead rates to apply overhead costs to products based on expected output levels, but actual overhead costs may differ from the predetermined rates. The variance is calculated to help managers identify where overhead costs are exceeding expectations and to take actions to address the issues.

In a Standard Costing System, the Total Manufacturing Overhead Variance