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How is manufacturing overhead calculated in each of the costing methods? How are variances identified?

How is manufacturing overhead calculated in each of the costing methods? How are variances identified?

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Manufacturing overhead means the indirect expenses related to the manufacturing of a product. The cost attributable to a particular product according to the number of units manufactured is the basis on which the manufacturing overhead is calculated.

There can be variances in the budgeted manufacturing overhead and the actual manufacturing overhead. In order to calculate the variance, one needs to subtract the budgeted manufacturing overhead from the actual manufacturing overhead.

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