The lower plant leasing, lower administrative costs, lower depreciation on equipment and plant are all the factors of _____________?
Correct answer: A. favorable spending variance
- A. favorable spending variance
- B. unfavorable price variance
- C. favorable price variance
- D. unfavorable spending variance
Explanation
When actual fixed overhead items such as leasing, administration and depreciation are below budget, the business spends less than planned and records a favorable spending variance. This is not a price variance because the items are fixed overhead costs.
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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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