The Total Overhead Cost Variance Is Equal to the Difference

question 16

Multiple Choice

The total overhead cost variance is equal to the difference between

• A)fixed overhead costs and variable overhead costs.
• B)estimated overhead rate and applied overhead rate.
• C)actual overhead costs and variable overhead costs.
• D)actual overhead costs and standard overhead costs.

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Definitions:

Inventory Cost

The total cost associated with buying, producing, and storing inventory, including purchase prices, production costs, and related expenses.

Cost Flow Assumptions

Refers to the methods used to determine the cost of inventory sold and remaining inventory value, including FIFO, LIFO, and weighted average.

FIFO

An inventory valuation method where goods first received are the first ones sold, used in accounting to determine cost of goods sold.

LIFO

LIFO, standing for Last-In, First-Out, is an accounting method used for inventory valuation where the most recently produced or acquired items are the first to be expensed.