ACTG 2020 Quiz: management acc book summary notes pt4
Document Summary
An overhead performance report provides details on each item that makes up total variable and fixed overhead. Both actual and budget figures are included in the report. Companies that use a standard costing system can prepare a performance report that includes both spending and efficiency variances for variable overhead and the budget variance for fixed overhead. Managers use the performance report to understand which specific overhead items are contributing the most to the overall variances for variable and fixed overhead. [lo7: only unusual or particularly significant variances should be investigated otherwise, a great deal of time could be spent investigating unimportant matters. Variance investigation decisions can be based on the dollar amount of the variance or the size of the variance relative to the amount of spending. A statistical control approach can also be employed, whereby only variances that are a certain number of standard deviations above or below zero are investigated.
