A Favorable Cost Variance Occurs When

question 150

Multiple Choice

A favorable cost variance occurs when

• A) Actual costs are more than standard costs.
• B) Standard costs are more than actual costs.
• C) Standard costs are less than actual costs.
• D) None of the above.

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Definitions:

Space Occupied

The amount of physical area taken up by an object, person, or activity, typically measured in square feet or meters.

Step-down Method

The step-down method is an accounting practice used to allocate costs among departments, beginning with the highest cost pool.

Allocation Base A

An allocation base is a measure or quantity, such as machine hours or labor costs, used to assign indirect costs to different products or services.

Allocation Base B

A criterion or standard used to distribute overhead costs among various cost objects.