company is renting a warehouse. The rental is a fixed overhead cost.  The company applies fixed overhead costs on the basis of direct labor hours. The predetermined overhead rate is $12 per direct labor hour. The following information is given:  Planned production units of product  1,000 units Standard direct labor hours per unit of product 5 hours Budgeted rental cost $61,000 Actual production units of product 1,100 units Actual rental cost incurred $64,000 The fixed overhead volume (production volume) variance is:   A. $1,000, Unfavorable   B. $4,000, Unfavorable   C. $3,000, Unfavorable   D. $2,000, Favorable   E. $5,000, Favorable

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Q: Ans

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Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit.  Overhead expenses depend upon the nature of the business operations.