If Ferg Company Has a $12,000 Unfavourable Variable-Overhead Efficiency Variance

question 129

Multiple Choice

If Ferg Company has a $12,000 unfavourable variable-overhead efficiency variance, which of the following statements would be true?

• A) Ferg would credit the Cost of Goods Sold account to write-off the variance.
• B) Ferg used the variable overhead components more effectively than expected.
• C) Ferg made efficient use of the cost driver.
• D) Ferg used the variable overhead components and cost driver as expected.
• E) Ferg did not use the cost driver efficiently.

---

Definitions:

ROE

Return on Equity, a measure of financial performance calculated by dividing net income by shareholders' equity.

Capital Structure

The mix of debt and equity financing used by a company to finance its overall operations and growth.

Expected State

Refers to the predicted condition or status of an entity or economy based on current trends or models.

Unlever

The process of reducing or eliminating leverage (debt) within a company's capital structure.