Steps:

1. Choose the period

2. Select cost allocation bases to use in allocating variable overhead costs to input

3. Indentify the variable overhead costs associated with each cost-allocation base

4. Calculate the rate per unit of each cost-allocation base used to allocate variable OHDS to Output produced

- Budgeted Variable OHD Rate = Budgeted input allowed per output UNIT x Budgeted variable overhead cost rate per input unit.

Fixed OHD Flexible Budget Variance VOHD Budget Variance (AND Flexi-budget variance)

FOHD Budget Variance = ACTUAL COSTS INCURRED - STATIC BUDGET AMOUNT

Fixed OHD PRODUCTION-VOLUME VARIANCE

FOHDEV = BUDGETED FIXED OVERHEAD - FOHD ALLOCATED USING FLEXI RATE FOR ACTUAL OUTPUT

FIXED OVERHEAD OVER/UNDER APPLIED - ACTUAL FIXED OVERHEAD - FOHD ALLOCATED USING FLEXI RATE FOR ACTUAL OUTPUT

Attachment:- Indentify the variable overhead costs.pdf