1. Why do some firms choose to use a two-variance analysis instead of a three-variance or a four- variance analysis of the total overhead variance for the period?
2. What is the difference between the applied variable overhead and the total variable overhead in the flexible budget? What is the difference between the applied factory overhead and the total flexible budgeted fixed overhead?
3. Would the choice of denominator level affect the amount of the fixed factory overhead budget vari- ance? Production-volume variance? Explain.