Which of the Following Variances Would Be Useful in Calling

question 161

Multiple Choice

Which of the following variances would be useful in calling attention to possible problems in the control of spending on overhead items? $\begin{array}{lll}\text { Variable overhead } &\text { Fixed overhead } \\\text { spending variance }& \text { volume variance } \\\text { A) No } & \text { No } \\\text { B) No } & \text { Yes } \\\text {C) Yes } & \text { No } \\\text { D) Yes } & \text { Yes }\end{array}$

• A) Option A
• B) Option B
• C) Option C
• D) Option D

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Definitions:

Equity Method

An accounting technique used when an investing company holds significant influence over the investee but does not have full control over it, involving the recognition of income on the investment based on the investee’s net income.

Unrealized Profits

Profits that have been earned but not yet realized through a transaction, such as an increase in value of an asset that has not been sold.

Intercompany Sales

Transactions involving the exchange of goods or services between subsidiaries within the same parent company.

Mark-Up

The amount added to the cost price of goods to cover overhead and profit, resulting in the selling price.