Variable overhead spending variances variable

This preview shows page 53 - 58 out of 58 pages.

Variable-Overhead Spending Variances Variable- Overhead Spending Variances Arises when actual variable overhead costs differ from the amount predicted for the actual cost-driver activity Positive: Actual Variable overhead rate < Standard Variable overhead rate Negative : Actual Variable overhead rate > Standard Variable overhead rate = Actual Variable Over head (Standard variable overhead rate per unit of cost driver * Actual Cost driver activity used)
Image of page 53
Analysis of Variable Overhead Variances Actual overhead Cost Incurred Predicted overhead Based on Actual Driver Use * Standard Prices Flexible Budget: Standard Driver Use Allowed for Output Achieved * standard Prices A B C Spending Variance (A B ) Efficiency Variance (B C ) Flexible Budget Variance (overhead) (A C )
Image of page 54
Material, Labor and Variable Overhead Variance Analysis Actual Quantity / hours Standard Quantity / Hours Actual Price / rate Standard Price / Rate Standard inputs allowed per unit of output Direct Material Direct Labor Variable Overhead Finished Units Produced
Image of page 55
Learning Objective 8 Fixed Overhead Spending Variance
Image of page 56
Fixed Overhead Spending Variance The flexible budget based on actual use of the cost driver and the flexible budget based on standard use of the cost driver are always the same because fixed overhead does not vary with the level of use of the cost driver. Therefore . . . The difference between actual fixed overhead and budgeted fixed overhead is the fixed overhead spending variance.
Image of page 57
Analysis of Fixed Overhead Variances Actual overhead Cost Incurred Predicted overhead Based on Actual Driver Use * Standard Prices Flexible Budget: Standard Driver Use Allowed for Output Achieved * standard Prices A B C Spending Variance (A B ) Never a Variance (B C ) = 0 Flexible Budget Variance (overhead) (A C ) Same as Spending variance
Image of page 58

You've reached the end of your free preview.

Want to read all 58 pages?

  • Fall '19
  • Direct material price variance

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes
A+ icon
Ask Expert Tutors