The Difference Between the Total Budgeted Overhead Cost and the Overhead

question 126

Multiple Choice

The difference between the total budgeted overhead cost and the overhead applied to production using the predetermined overhead rate is the:

• A) Production variance
• B) Volume variance
• C) Overhead cost variance
• D) Quantity variance
• E) Controllable variance

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Definitions:

Direct Labor-hours

The sum of hours logged by workers directly engaged in creating products.

Manufacturing Overhead

Manufacturing overhead encompasses all costs of manufacturing beyond direct materials and direct labor, including expenses like factory equipment depreciation and quality control.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate manufacturing overhead costs to production activities based on a certain base, such as direct labor hours or machine hours.

Job Cost

The total cost associated with creating a specific product or completing a specific job, including materials, labor, and overhead.