Which one of the following describes the total overhead variance?

A. The difference between what was actually incurred and the flexible budget amount.

B. The difference between what was actually incurred and overhead applied.

C. The difference between the overhead applied and the flexible budget amount.

D. The difference between what was actually incurred and the total production budget

Question

Business

Lilian Burton

11 September, 22:24

Which one of the following describes the total overhead variance?

A. The difference between what was actually incurred and the flexible budget amount.

B. The difference between what was actually incurred and overhead applied.

C. The difference between the overhead applied and the flexible budget amount.

D. The difference between what was actually incurred and the total production budget

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Answers (1)

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Milo · Answer 1

B. The difference between what was actually incurred and overhead applied.

Explanation:

This could be simply as the difference of what was actually incurred and overhead that was been applied or it could be the difference between the amount that would be absorbed into the cost/unit of the actual units of a certain commodity been produced, and the actual cost of the fixed overheads.

This could be seen in a certain number of labor hours taken to manufacture a an amount of product, as it may differ significantly from the standard or budgeted number of hours of the work been done.