When Variable Overhead Efficiency Variance Is Favorable, It Can Be

question 45

Multiple Choice

When variable overhead efficiency variance is favorable, it can be safely assumed that the ________.

• A) actual rate per unit of the cost-allocation base is higher than the budgeted rate
• B) actual quantity of the cost-allocation base used is higher than the budgeted quantity
• C) actual rate per unit of the cost-allocation base is lower than the budgeted rate
• D) actual quantity of the cost-allocation base used is lower than the budgeted quantity

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Definitions:

Terms of Sale

The conditions under which a seller will complete a sale, typically specifying the time and method of payment and when the buyer takes possession of the goods.

Credit Period

The duration of time a buyer is given by a seller to pay for a purchase.

Cash Discount

An incentive offered by sellers to encourage buyers to pay their invoice ahead of the due date.

Discount Period

The time frame between the date a bill is issued and its payment date, within which payment may be made at a discount.