COST ACCOUNTING
INTRODUCTION TO COST ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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actual variable overhead costs and the static budget for variable overhead costs
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actual variable overhead costs and the flexible budget for variable overhead costs
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the static budget for variable overhead costs and the flexible budget for variable overhead costs
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None of these answers is correct.
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Detailed explanation-1: -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.
Detailed explanation-2: -Variable Overhead Spending Variance is the difference between what the variable production overheads actually cost and what they should have cost given the level of activity during a period. The standard variable overhead rate is typically expressed in terms of machine hours or labor hours.
Detailed explanation-3: -The difference between the actual and standard variable overhead cost of the inputs is called the variable overhead spending variance. The actual cost incurred by the company is matched with the budgeted cost or the cost estimated by the company. The difference between both the figures is the variance of spending.
Detailed explanation-4: -Variable overhead efficiency variance refers to the difference between the true time it takes to manufacture a product and the time budgeted for it, as well as the impact of that difference.
Detailed explanation-5: -The fixed overhead spending variance is the difference between the actual fixed overhead expense incurred and the budgeted fixed overhead expense.