Factors Contributing to the Fixed Factory Overhead Spending Variance Can

question 24

Multiple Choice

Factors contributing to the fixed factory overhead spending variance can include all the following except:

• A) Inaccurate budget estimates for these costs.
• B) Inadequate control of fixed overhead costs.
• C) Misclassification of cost items by the accounting system.
• D) Operating inefficiency.
• E) Unanticipated increases in costs such as factory insurance.

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Definitions:

Direct Labor-Hours

The total number of hours worked by employees who are directly involved in the manufacturing process.

Fixed Manufacturing Overhead

Costs in manufacturing that do not change with the level of production output, such as rent, salaries of permanent staff, and depreciation of factory equipment.

Job-Order Costing System

A costing system that assigns costs to specific production jobs, useful for customized orders.

Predetermined Overhead Rate

is a rate used to allocate manufacturing overhead to products, calculated before the accounting period based on estimated costs.