An Unfavorable Cost Variance Occurs When Budgeted Cost at Actual

question 9

True/False

An unfavorable cost variance occurs when budgeted cost at actual volumes exceeds actual cost.

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Definitions:

Fixed Costs

Expenses that do not change in total regardless of the level of production or sales activity.

Absorption Costing

A product costing approach that incorporates all costs of manufacturing, including both fixed and variable, into the product's price.

Absorption Costing

An inventory pricing approach that incorporates all costs associated with manufacturing, including both variable and fixed expenses, into the product's cost.

Variable Costing

An accounting method that includes only variable production costs in the cost of goods sold and treats fixed overhead expenses as period costs.