Of the cost allocation base, the difference between actual and budgeted variable overhead cost multiplied by actual quantity for actual output is classified as ____________?
Correct answer: A. variable overhead spending variance
- A. variable overhead spending variance
- B. fixed overhead spending variance
- C. constant spending variance
- D. potential spending varianceHire An Accountant
Explanation
Variable overhead spending variance compares actual variable overhead with the flexible-budget variable overhead allowed for the actual quantity of the allocation base. It therefore isolates the difference in the spending rate, not fixed overhead or a potential amount.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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