Assume that machine hours is the cost driver for overhead. The difference between the actual variable...
Assume that machine hours is the cost driver for overhead. The difference between the actual variable overhead incurred and the applied variable overhead is the: Select one: a. spending variance. b. volume variance. c. efficiency variance. d. sum of the spending and efficiency variances. e. production variance.
Homework Answers
Ans.) A - A spending variance is the difference between the actual and expected (or budgeted) amount of an expense.
Definition of other options are given below:
A volume variance is the difference between the actual quantity sold or consumed and the budgeted amount expected to be sold or consumed, multiplied by the standard price per unit.
An efficiency variance is the difference between actual and budgeted quantities you purchased for a specific price
The production volume variance measures the amount of overhead applied to the number of units produced. It is the difference between the actual number of units produced in a period and the budgeted number of units that should have been produced, multiplied by the budgeted overhead rate
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