Standard Costing — Overhead Variances and Sales Variances

Abstract

When we examined absorption costing in Chapter 7, we saw that overheads could be charged to production in a variety of ways. The budgeted overhead for the period was divided by the appropriate units of base, a measure of time being the preferred method. One method of measuring output is in the form of standard hours of production. This is the method we will use in this chapter when considering overhead variance analysis.