When Variable Overhead Spending Variance Is Unfavorable, It Can Be

question 101

Multiple Choice

When variable overhead spending variance is unfavorable, it can be safely assumed that ________.

• A) actual rate per unit of cost-allocation base is higher than budgeted rate
• B) actual quantity of cost-allocation base used is higher than budgeted quantity
• C) actual rate per unit of cost-allocation base is lower than budgeted rate
• D) actual quantity of cost-allocation base used is lower than budgeted quantity

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Definitions:

Boeing

An American multinational corporation that designs, manufactures, and sells airplanes, rotorcraft, rockets, satellites, telecommunications equipment, and missiles worldwide.

Law of Diminishing Returns

An economic principle stating that adding more of one factor of production, while holding others constant, will at some point yield lower per-unit returns.

Fixed Factor

An input in the production process that cannot be changed in the short term, such as premises or machinery.

Output Decreasing

A situation where the quantity of goods or services produced by an economy or firm is reducing over time.