The Part of the Variable Overhead Budget Variance Due to the Difference

question 17

Multiple Choice

The part of the variable overhead budget variance due to the difference between actual variable overhead cost and the standard cost allowed for the actual inputs used is called the:

• A)variable overhead spending variance.
• B)variable overhead budget variance.
• C)variable overhead efficiency variance.
• D)variable overhead volume variance.

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Definitions:

Variable Overhead Rate

The rate at which variable overhead costs fluctuate with changes in activity level or production volume, expressed per unit of activity.

Fixed Manufacturing Overhead

The consistent, static costs associated with manufacturing a product, such as rent for factory premises or salaries for permanent staff, which do not change with production volume.

Budget Variances

The difference between budgeted or planned financial activity and the actual financial performance, indicating over or underperformance against budget.

Machine-Hours

A measurement of the amount of time machines are operating, used as a basis for allocating machine-related costs to products or services.