Which One of the Following Describes the Total Overhead Variance

question 239

Multiple Choice

Which one of the following describes the total overhead variance?

• A) The difference between what was actually incurred and the flexible budget amount
• B) The difference between what was actually incurred and overhead applied
• C) The difference between the overhead applied and the flexible budget amount
• D) The difference between what was actually incurred and the total production budget

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Definitions:

Variable Costs

Costs that vary in direct proportion to changes in the level of production or sales.

Fixed Costs

Expenses that remain constant regardless of the level of output or sales, including rent, wages, and insurance costs.

Margin of Safety

The difference between actual or expected sales and sales at the break-even point. It measures how close a company is to not covering its fixed costs.

Break-even Sales

The amount of revenue from sales that exactly covers the fixed and variable costs of producing and selling a product, with no profit or loss.