For Overhead Variances, the Difference Between the Flexible Budget Amounts

question 51

Multiple Choice

For overhead variances, the difference between the flexible budget amounts and actual costs incurred is called the

• A) Efficiency variance
• B) Budget variance
• C) Favorable variance
• D) Quantity variance

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Definitions:

Variable Inputs

Resources used in production that can vary in quantity in the short run, such as labor and raw materials.

Diminishing Returns

A principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other inputs remain constant.

Fixed Inputs

Resources used in production that cannot be easily increased or decreased in the short term, such as buildings or machinery.

Variable Inputs

Resources or factors of production whose quantity can be changed in the short term to influence output.