After studying this chapter, you should be able to . . .

1. Distinguish between the product-costing and control purposes of standard costs for manufacturing overhead
2. Calculate and properly interpret standard cost variances for manufacturing overhead using flexible budgets
3. Record overhead costs and associated standard cost variances
4. Dispose of standard cost variances at the end of a period
5. Apply standard costs to service organizations
6. Analyze overhead variances in a traditional activity-based cost (ABC) system
7. Understand decision rules that can be used to guide the variance-investigation decision
8. Formulate the variance-investigation decision under uncertainty (Appendix)