Which do you think is more important for controlling fixed overhead costs: the spending variance or the volume variance?
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Which do you think is more important for controlling fixed
(This is not a subjective matter of opinion but rather is based on accounting principles and theory and hence the answer presented below is an objective one.)
Every organization looks at ways to control its fixed overhead costs.
Fixed overhead costs are those costs that remain same and do not change with the change in the levels of business activity. Examples of fixed overhead costs are rent, salaries etc.
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