If a Company Uses a Two-Variance Analysis for Overhead Variances

question 54

Multiple Choice

If a company uses a two-variance analysis for overhead variances and uses a predetermined rate for absorbing manufacturing overhead, the volume variance is the:

• A)Underapplied or overapplied variable cost element of overhead.
• B)Underapplied or overapplied fixed cost element of overhead.
• C)Difference in budgeted costs and actual costs of fixed overhead items.
• D)Difference in budgeted costs and actual costs of variable overhead items.

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Definitions:

Balance Sheet

A balance sheet is a financial statement that provides a snapshot of a company's financial position, showing assets, liabilities, and shareholders' equity at a specific point in time.

Debt-to-Equity Ratio

A financial ratio indicating the relative proportion of shareholder's equity and debt used to finance a company's assets.

Total Assets

Total assets refer to the sum of all current and non-current assets owned by a business at a given point in time.

Total Liabilities

The sum of all financial obligations a company owes to external parties at a given time.