A Favorable Spending Variance Occurs When the Actual Cost Exceeds

question 79

True/False

A favorable spending variance occurs when the actual cost exceeds the amount of that cost in the flexible budget.

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Definitions:

FIFO Method

An inventory valuation method where the first items purchased or produced are the first ones to be sold or used, standing for "First In, First Out."

Conversion Costs

The combination of direct labor costs and manufacturing overheads that are incurred in converting raw materials into finished goods.

Total Costs

The complete sum of all expenses, direct and indirect, incurred in producing a good or delivering a service.

Finished Goods

Finished Goods are products that have completed all stages of production and are ready for sale to customers.