ECONOMICS

Detailed explanation-1: -Responsibility for the overhead efficiency variance should be assigned to whoever is responsible for control of the activity base underlying the flexible budget. A favorable variable overhead efficiency variance indicates that overhead has been used efficiently.

Detailed explanation-2: -Responsibility for the variable overhead spending variance is generally assigned to production departments.

Detailed explanation-3: -Flexible-budget variance analysis can be used in the control of costs in an activity area by isolating spending and efficiency variances at different levels in the cost hierarchy.

Detailed explanation-4: -The correct answer is option A. actual hours x (actual rate-standard rate).

Detailed explanation-5: -The flexible budget variance measures the difference between the actual variable overhead costs and the flexible budget for variable overhead costs. It is also called the budget variance because it measures the difference between the budgeted amount that must be incurred versus the actual amount incurred.