[barelystayingsane]

I’ve been having trouble with applied overhead, specifically within the context of variance analysis, and I finally figured out what’s been tripping me up. On page B1-39 (Becker 2013), Becker says that Applied overhead = ACTUAL cost driver x Overhead rate. But then on page B2-45, Becker says that Applied overhead = STANDARD cost driver for actual level of activity x Overhead rate.

“Actual cost driver” and “standard cost driver for actual level of activity” just don’t equate in my mind. Does someone have a better way of explaining this to me?

Thank you!

[barelystayingsane]

bump

[Zaq]

I actually need this as well. It's one of the few flashcards for my formulas that I left blank. I'm also confused about:

Is Sales Price & Volume Variance actually (Act. Price – Std. Price)? I know that DL/DMVariances follow the SAD mnemonic, but I found it strange that Sales Price & Volume doesn't. Especially with the mishap on B2 where Becker first introduces DL/DM variance using (Act. X – Std. X) and the next page says “Always Std. – Act.” Becker does a horrible job explaining the variances I feel.

I THINK the OH Application is:

Step 1: OH Rate = Budgeted OH/Est. cost driver (I don't know what the cost driver is)

Step 2: Application OH = Std. Cost Driver x OH Rate

FAR: 50, 76!
REG: 74... (ouch baby, very ouch), 76!
AUD: 65, 91!?
BEC: 80! Aaaand doneskies!

May 2012 to August 2013. Can't believe it's over.

[barelystayingsane]

@InfernoOmni Honestly, I don't worry about the order of actual vs. standard when performing the calculation, because it just trips me up. Just calculate the absolute value of the variance and then look back at the information given to see if actual or standard price (or actual or standard DLH, or whatever it may be) is higher. When it comes to sales, you obviously want the actual price to be higher so you can get more revenue. When it comes to costs, you obviously want the actual cost to be lower.

[barelystayingsane]

To expand upon my initial question, in B1, some of the questions would ask you to calculate total manufacturing cost and say that direct labor cost was $200,000 and manufacturing overhead was applied at 70% of DL cost. To me, that DL cost of $200,000 seems like an actual cost that's part of the production data, not a standard cost driver for an actual level of activity. So I'm just confused on the different treatment of applied OH between B1 and B2.

[barelystayingsane]

@InfernoOmni I figured out my question too. They're using two different costing systems. The B1 equation is for a traditional costing system, and the B2 equation is for a standard costing system. I feel so overwhelmed by this exam.

[xdesix]

I take BEC tomorrow and I'm basically giving up understanding Overheard variances lol. I'm good with a lot of the other material, but I can't seem to grasp this at all.

AUD: Passed
BEC: Passed
REG: Studying

[Zaq]

I'm upset that it took me so long to realize that “Standard” was just lamens terms for “Budgeted”. I hate how Becker used them interchangeably; even sometimes within the same formula i.e. A[BA] [BS]A.

FAR: 50, 76!
REG: 74... (ouch baby, very ouch), 76!
AUD: 65, 91!?
BEC: 80! Aaaand doneskies!

May 2012 to August 2013. Can't believe it's over.

[mmp3]

barelystayingsane: I was initially having lots of trouble with overhead variances too. I looked back at previous posts and I am pretty sure it was you who posted your homemade youtube video with the 4 columns? I use your column thing for every problem but I added Becker's A-BA-BS-A to the top of your 4 columns and I have gotten every variance question correct since then. That thing is genius. As far as applied overhead I look for the info given in the problem. If it says overhead is applied a 200% of direct labor for the period I calculate it that way. If not I calculate it based on your formula in the 4th column. Does that make sense?

FAR 92 (2/27/13)
AUD 99 (4/18/13)
REG 93 (7/5/13)
BEC 92 (8/12/13)

Becker Self Study

[Zaq]

Can you repost that formula video thing? I think I have it somewhere in my notes.

FAR: 50, 76!
REG: 74... (ouch baby, very ouch), 76!
AUD: 65, 91!?
BEC: 80! Aaaand doneskies!

May 2012 to August 2013. Can't believe it's over.

[xdesix]

I would love a video and a quick explanation of A-BA-BS-A. It seems to be the only thing i'm struggling with now.

AUD: Passed
BEC: Passed
REG: Studying

[barelystayingsane]

@mmp3 yeah, that was me! I'm glad it was helpful! After my confusion with overhead, I realized that part of the reason I was so confused is that my professor in college split overhead into two tables: one for variable overhead, and one for fixed overhead. So I think I use VOH in that video, but for anybody watching it, just know that it doesn't apply for TOTAL overhead. It won't show the production volume variance and all that stuff. For the overhead variances, I just ended up memorizing Becker's formulas. But it's perfect for the DM and DL variances, and I felt that it really helped me cement my understanding of variances. I'll try to find the video and repost it.

[mmp3]

I just bumped it up in a different thread

FAR 92 (2/27/13)
AUD 99 (4/18/13)
REG 93 (7/5/13)
BEC 92 (8/12/13)

Becker Self Study

[Author]

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