Chapter 8 - Flexible Budgets, Overhead Cost Variances, and Management Control - Assignment Material - Questions - Page 316: 8-13

In a 4-variance analysis, the following are the four Variances 1. Spending Variance: This variance assesses the difference between the actual overhead costs incurred and the budgeted overhead costs based on the actual input quantity. 2. Efficiency Variance: This variance reflects the impact of using more or fewer input resources (e.g., machine hours) than standard on overhead costs. 3. Production-Volume Variance: This variance accounts for the difference between the budgeted fixed overhead costs and the actual fixed overhead costs based on the actual production volume. 4. Fixed Overhead Variance : This variance indicates the difference between the budgeted fixed overhead costs and the actual fixed overhead costs.

The 4-variance analysis provides a comprehensive view of the overhead variances, both variable and fixed, and helps in understanding the reasons for cost differences in a unified presentation. Additionally, it may highlight variances that are "never a variance," meaning they are consistently aligned with the budget.