Which of the Following Variances Would Be Useful in Calling

question 100

Multiple Choice

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

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

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Definitions:

Impairment

A decrease in the recoverable amount of an asset to below its carrying amount on the balance sheet, resulting in a charge to the company's earnings.

Cash-Generating Units

The smallest identifiable group of assets that generates cash inflows independently of other assets or groups of assets.

Business Combination

A transaction or event in which a buyer obtains control of one or more businesses.

Goodwill

An intangible asset reflecting the premium paid over the fair market value of assets during an acquisition, attributed to the company's brand, customer relations, and reputation.