Factory Overhead Cost Elements

Fixed overhead costs are those that fluctuate with the level of production.

Variable overhead costs include salaries for administrative staff.

Variable overhead costs may be challenging to control and keep within a budget.

Factory overhead variance is separated into a material variance and a labor variance.

The controllable variance in factory overhead reflects the difference between actual and budgeted overhead costs.

Volume variance in factory overhead arises due to fluctuations in the level of production activity.

Fixed overhead costs remain constant regardless of changes in production levels.

Variable overhead costs like production supplies and energy costs increase as production output decreases.

The controllable variance in factory overhead measures the efficiency of management in controlling costs.

Volume variance in factory overhead is caused by differences between budgeted and actual production levels.

Wages for workers handling and shipping the product are considered fixed overhead costs.

Factory overhead cost includes both fixed and variable cost elements.