A. The variable overhead spending variance is the difference between the actual application rate (the actual application rate is calculated as the actual overhead costs ÷ the actual usage of the allocation base) and the standard application rate multiplied by the actual quantity of the application base. Because actual variable costs are used in this variance, it is an important area of cost control.

B. The labor price variance is the difference in labor rates between actual and standard used in production. It is an important area of cost control.

C. The materials quantity variance is the difference between the quantity of materials actually used in production and the standard quantity of materials allowed for the actual level of output. It is an important area of cost control.

D. The fixed overhead volume variance is the difference between the budgeted amount of fixed overhead and the amount of fixed overhead applied (standard rate × standard input for the actual level of output). It does not reflect any differences between actual costs and budgeted costs. This variance concerns only the level of production. If the actual level of production is lower than the budgeted level, the fixed overhead volume variance will be unfavorable. If the actual production level is higher than the budgeted level, the fixed overhead volume variance will be favorable. Because this variance arises from a variance in the level of production, it is not very significant for cost control purposes.