Multiple Choice QuestionThe overhead variance is the difference between:Multiple choice question.budgeted overhead and standard overhead appliedactual total overhead and the standard overhead appliedactual total overhead and the standard overhead budgeted
Question
Multiple Choice QuestionThe overhead variance is the difference between:Multiple choice question.budgeted overhead and standard overhead appliedactual total overhead and the standard overhead appliedactual total overhead and the standard overhead budgeted
Solution
The overhead variance is the difference between:
A. Budgeted overhead and standard overhead applied B. Actual total overhead and the standard overhead applied C. Actual total overhead and the standard overhead budgeted
The correct answer is B. Actual total overhead and the standard overhead applied.
Here's why:
Overhead variance is a measure of how much overhead costs deviate from what was originally budgeted. It is calculated by subtracting the standard overhead (the amount that was expected to be spent) from the actual overhead (the amount that was actually spent).
So, if the actual total overhead costs were higher than what was originally budgeted (the standard overhead), there would be a positive overhead variance. If the actual total overhead costs were lower than what was originally budgeted, there would be a negative overhead variance.
Therefore, the overhead variance is the difference between the actual total overhead and the standard overhead applied.
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