A Closer Look at Overhead Variances

A Closer Look at Overhead Variances - A study objective 10...

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A Closer Look at Overhead Variances study objective 10 Compute overhead controllable and  volume variance. As indicated in the chapter, the total overhead variance is generally analyzed through a price variance  and a quantity variance. The name usually given to the price variance is the  overhead controllable  variance ; the quantity variance is referred to as the  overhead volume variance . OVERHEAD CONTROLLABLE VARIANCE The  overhead controllable variance  shows whether overhead costs are effectively controlled. To  compute this variance, the company compares actual overhead costs incurred with budgeted costs for  the  standard hours allowed . The budgeted costs are determined from a flexible manufacturing  overhead budget. The concepts related to a flexible budget were discussed in Chapter  21 . For Xonic the budget formula for manufacturing overhead is variable manufacturing overhead cost of  $3 per hour of labor plus fixed manufacturing overhead costs of $4,400. Illustration  22B-1  shows the  monthly flexible budget for Xonic, Inc. 
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This note was uploaded on 11/08/2011 for the course ACCOUNTING ac 202 taught by Professor - during the Fall '11 term at Montgomery.

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A Closer Look at Overhead Variances - A study objective 10...

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