COST ACCOUNTING
INTRODUCTION TO COST ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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the flexible-budget amount exceeded actual variable manufacturing overhead by $5, 000
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the actual variable manufacturing overhead exceeded the flexible-budget amount by $5, 000
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the flexible-budget amount exceeded standard variable manufacturing overhead by $5, 000
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the standard variable manufacturing overhead exceeded the flexible-budget amount by $5, 000
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Detailed explanation-1: -A $5, 000 unfavorable flexible-budget variance indicates that: the actual variable manufacturing overhead exceeded the flexible-budget amount by $5, 000.
Detailed explanation-2: -A budget variance is an accounting term that describes instances where actual costs are either higher or lower than the standard or projected costs. An unfavorable, or negative, budget variance is indicative of a budget shortfall, which may occur because revenues miss or costs come in higher than anticipated.
Detailed explanation-3: -Variable overhead spending variance is unfavorable if the actual costs are higher than the budgeted costs.
Detailed explanation-4: -An unfavorable variance means that actual fixed overhead expenses were greater than anticipated. This is one of the better cost accounting variances for management to review, since it highlights changes in costs that were not expected to change when the fixed cost budget was formulated.