The Variance That Captures the Effect of Efficient Use of the Activity

question 146

Multiple Choice

The variance that captures the effect of efficient use of the activity base on the cost of variable overhead is the

• A)variable overhead spending variance.
• B)variable overhead efficiency variance.
• C)variable overhead volume variance.
• D)variable overhead rate variance.

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Definitions:

Permanent Working Capital

The minimum amount of investment in current assets that a company needs to sustain its business operations.

Short-Term Debt

Describes obligations and loans that are due to be paid back within a year.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and efficiency in managing its operational needs.

Capital Commitment

The amount of capital a company is obligated to spend over a period, typically for investment in long-term assets or projects.