An Unfavorable Variable Overhead Spending Variance May Be Caused by

question 112

Multiple Choice

An unfavorable variable overhead spending variance may be caused by

• A) the use of excessive quantities of variable overhead items.
• B) the payment of lower prices for variable overhead items used.
• C) the use of excessive quantities of the variable overhead allocation base.
• D) both a and b.

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Definitions:

Applied to Production

Pertaining to costs or accounting methodologies directly associated with the manufacturing or creation process of goods or services.

Work in Process Inventory

Goods partially completed but not yet ready for sale, particularly in manufacturing, representing an ongoing production stage.

Direct Materials

Basic substances that are specifically identifiable in the creation of a particular product.

Indirect Materials

Materials used in the production process but not directly traceable to a finished product, such as lubricants and cleaning supplies.