An Unfavourable Variable Overhead Rate Variance Indicates That

question 150

Multiple Choice

An unfavourable variable overhead rate variance indicates that

• A)variable overhead items were used efficiently.
• B)the price and/or use of variable overhead items was more than budgeted.
• C)the variable overhead cost-allocation base was not used efficiently.
• D)the denominator level was not accurately determined.
• E)the denominator level was used more than planned.

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Definitions:

Fixed Cost

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Certification

The process of officially recognizing someone as having met certain standards, often related to education, skills, or competencies.

Long Run

A time frame where all production elements and expenses can change, providing businesses the flexibility to adapt to market fluctuations.

Short Run

A period in which at least one input in the production process is fixed, limiting the ability to adjust the production level.