| Budget variance | The difference between the actual fixed overhead costs incurred and the budgeted fixed overhead costs in the flexible budget.
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| Denominator activity | The level of activity used to compute the predetermined overhead rate.
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| Flexible budget | A budget that can be used to estimate what costs should be for any level of activity within a specified range.
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| Static budget | A budget created at the beginning of the budgeting period that is valid only for the planned level of activity.
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| Volume variance | The variance that arises whenever the standard hours allowed for the actual output of a period are different from the denominator activity level that was used to compute the predetermined overhead rate. It is computed by multiplying the fixed component of the predetermined overhead rate by the difference between the denominator hours and the standard hours allowed for the actual output.
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