Normally, Managers Will Not See Many Fixed Overhead Spending Variances

question 139

Multiple Choice

Normally, managers will not see many fixed overhead spending variances because

• A)many fixed costs are contracted for or known ahead of time.
• B)fixed costs vary in proportion to activity, so differences do not normally arise.
• C)most fixed costs are allocated (such as depreciation), so no differences occur.
• D)actual fixed costs rarely differ from budgeted fixed costs.

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Definitions:

Investee

A party or entity in which an investor holds an interest, often through ownership of securities.

Common Stock

Equity ownership in a corporation, with rights to share in its profits and vote in company decisions.

Historical Cost Principle

An accounting principle that states assets should be recorded and reported at their original purchase cost.

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Charges levied by brokers for facilitating transactions between buyers and sellers in the financial markets.