For Overhead Variances, the Difference Between the Flexible Budget Amounts

question 24

Multiple Choice

For overhead variances, the difference between the flexible budget amounts and actual costs incurred is called the:

• A) Efficiency variance
• B) Budget variance
• C) Favourable variance
• D) Quantity variance

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Definitions:

Fixed Corporate Costs

Expenses that do not vary with production volume or sales, such as salaries of managerial staff and rent for corporate headquarters.

Fixed Expenses

Costs that do not fluctuate with changes in production level or sales volume.

Avoidable Expenses

Costs that can be eliminated if a certain decision is made, such as discontinuing a product line.

Financial Advantage

A benefit enjoyed by an entity that puts it in a stronger financial position, such as lower costs, greater revenues, or superior investment returns.