The Most Important Contributor to the Variance Between Actual and Applied

question 1

Multiple Choice

The most important contributor to the variance between actual and applied overhead costs is ________.

• A) poor forecasting
• B) inefficient use of overhead items
• C) price changes in overhead items
• D) operating at a different level of volume than the level used as a denominator in calculating the budgeted overhead rate

---

Definitions:

Transferred Out

Costs or materials moved from one department, process, or location to another in the course of manufacturing or accounting.

Effectiveness Measure

An evaluation metric to assess the degree to which objectives or goals are achieved, often used in performance management.

Equivalent Units

A concept used in process costing that converts partially completed units into a number of fully equivalent completed units.

Physical Units

A measure used in manufacturing and production to count the actual units produced, irrespective of the production stage.