Okay - I found a good example of the Fixed OH Volume variance question in becker. # CPA-03850. I just got it wrong! I think I'm getting confused w/ you too vegas in differentiating between standard and budget.

Kj_nyc can you help me out? They're asking for the volume variance. Which is essentially the amount Applied vs. amt Budgeted...

I get how they calculate the Budgeted OH = OH rate x budgeted production

BUT to get the applied they take = OH rate x actual production...and when they use actual prod they use the row that says "Machine hrs. plan based on output" instead of the machine hrs. actual.

- if they're using the "PLAN based on output" why is this production amount not then used when calculating the Budgeted OH, I guess I'm confused on what the heck difference is when it says it's planned, cause to me that means budgeted??

Okay..ahh, after re-reading this I think it just made sense. So if they were to take the OH rate x the ACTUAL production, that would = the ACTUAL OH. Sooo, we take the machine hrs PLANNED and that gets us to the Applied OH. AND THEN, if we calc. the budgeted amt. we take all the info up top "1992 Planning date" to get what was truly budgeted for for that project??

budgeted versus applied: budgeted, as you noted, is just (std OH rate)*(budgeted production).  "budgeted" numbers don't get adjusted based on actual output (activity), while "applied" numbers do.

Applied has a slight modification where you change the planned machine hours based on actual output (activity) - that's why you use the 21,000 machine hours (planbased on output) number given.

However, now I am confused in the CPA-03850 problem as to why, to get the standard fixed OH rate, you take the annual budgeted FOH/annual budgeted machine hours (1200/240) instead of the November numbers (100/22).  And I see how they get the 20,000 standard production hours based on $5 fixed OH rate and $100k budgeted fixed OH, but doesn't that contradict the 22,000 budgeted machine hours listed under November??