- Budgeted volume: budgeted # of units * the standard number of input per unit
- Standard volume: how much input should have been used = # product units produced * standard input per unit
- Actual volume: the amount of the volume measure actually occurred 

Absorbed overhead = overhead rate * standard volume

Total = actual overhead cost - overhead absorbed cost

adding and deducting flexible budget at actual volume and flexible budget at standard volume = spending variance + efficiency variance + volume variance

THREE OVERHEAD VARIANCES
- Spending variance = actual overhead cost - flexible budget at actual volume. The difference between the actual overhead and how much overhead should have been incurred for the actual volume measure used
 
- efficiency variance = flexible budget at actual volume - flexible budget at standard volume. Captures inefficiencies in using variable overhead.

- volume variance = flexible budget at standard volume - absorbed overhead. Captures overused or underused capacity of the facility.

- Cost terminology: fixed vs variable costs, break even point, indirect vs direct cost
- Cost allocation is relevant in different contexts
- Allocating service department costs to operating units  
- transfer pricing
- joint costing
- absorption costing & criticism
- standard costing: a benchmark to control & manage costs 
- trade offs in choice of cost driver or number of cost drivers
- costing method should fit to the production specificities
- pay attention to the purposes of cost allocation
- wrong accounting may lead to wrong decisions