The Fixed Overhead Spending Variance Measures

question 82

Multiple Choice

The fixed overhead spending variance measures:

• A) The difference between what was spent and what was expected to be spent on fixed overhead
• B) The fixed overhead rate this period compared to the rate last period
• C) The difference between the labour hours used to allocate fixed costs and actual labour hours used
• D) The difference between actual and expected utilities costs

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Definitions:

Machine-Hour

A measure of production output or activity based on the number of hours a machine is operated.

Fixed Manufacturing Overhead

A consistent cost incurred during manufacturing that does not vary with the level of production, such as salaries of managers or rent.

Cooling Coil

A component used in refrigeration and air conditioning systems to transfer heat and cool down air or liquids passing through it.

Predetermined Overhead Rate

A rate calculated by dividing the estimated total manufacturing overhead cost by the estimated job base for a specific period, used to allocate overhead costs to products.