Overhead expenses comprises of two elements which are (i) Variable Overheads and (ii) Fixed Overheads. The difference between the Actual Overheads and Standard Overheads can be of two reasons. Reason 1 − Difference in volume of production Reason 2 − Difference in rate of overheads While the difference in rate is considered as controllable variance, the other is non controllable and it is called as Overhead Volume Variance. Thus Overhead Cost Variance is sum of Overhead Controllable Variance and Overhead Volume Variance. The formula for calculating Overhead Cost Variances are as follows: Overhead Cost Variance (OCV) = Overhead Volume Variance (OVV) + Overhead Controllable/Price Variance (OPV) Also, OCV = Standard Overhead applied to production − Actual Overhead cost Controllable Overhead Variance

Question

Want to see the full answer?

Answer 1

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 23, Problem 14QS

To determine

Concept Introduction:

Overhead expenses comprises of two elements which are (i) Variable Overheads and (ii) Fixed Overheads.

The difference between the Actual Overheads and Standard Overheads can be of two reasons.

Reason 1 − Difference in volume of production

Reason 2 − Difference in rate of overheads

While the difference in rate is considered as controllable variance, the other is non controllable and it is called as Overhead Volume Variance.

Thus Overhead Cost Variance is sum of Overhead Controllable Variance and Overhead Volume Variance.

The formula for calculating Overhead Cost Variances are as follows:

Overhead Cost Variance (OCV) = Overhead Volume Variance (OVV) + Overhead Controllable/Price Variance (OPV)

Also, OCV = Standard Overhead applied to production − Actual Overhead cost

Controllable Overhead Variance

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

General accounting

TopLine Products has a budget with sales of 12,500 units and $5,200,000. Variable costs are budgeted at $2,375,000, and fixed overhead is budgeted at $825,000. What is the budgeted manufacturing cost per unit?

Not use ai solution please

Answer 2

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 23, Problem 14QS

To determine

Concept Introduction:

Overhead expenses comprises of two elements which are (i) Variable Overheads and (ii) Fixed Overheads.

The difference between the Actual Overheads and Standard Overheads can be of two reasons.

Reason 1 − Difference in volume of production

Reason 2 − Difference in rate of overheads

While the difference in rate is considered as controllable variance, the other is non controllable and it is called as Overhead Volume Variance.

Thus Overhead Cost Variance is sum of Overhead Controllable Variance and Overhead Volume Variance.

The formula for calculating Overhead Cost Variances are as follows:

Overhead Cost Variance (OCV) = Overhead Volume Variance (OVV) + Overhead Controllable/Price Variance (OPV)

Also, OCV = Standard Overhead applied to production − Actual Overhead cost

Controllable Overhead Variance

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 23, Problem 14QS

To determine

Concept Introduction:

Overhead expenses comprises of two elements which are (i) Variable Overheads and (ii) Fixed Overheads.

The difference between the Actual Overheads and Standard Overheads can be of two reasons.

Reason 1 − Difference in volume of production

Reason 2 − Difference in rate of overheads

While the difference in rate is considered as controllable variance, the other is non controllable and it is called as Overhead Volume Variance.

Thus Overhead Cost Variance is sum of Overhead Controllable Variance and Overhead Volume Variance.

The formula for calculating Overhead Cost Variances are as follows:

Overhead Cost Variance (OCV) = Overhead Volume Variance (OVV) + Overhead Controllable/Price Variance (OPV)

Also, OCV = Standard Overhead applied to production − Actual Overhead cost

Controllable Overhead Variance

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 23, Problem 14QS

To determine