Which of the following statements about variable overhead variances is correct? Variable overhead efficiency variance is not a useful control tool. Variable overhead spending variance may be caused by lower than expected usage of direct labour hours. Variable overhead spending variance is useful only as a product costing tool. Variable overhead efficiency variance highlights any inefficient uses of variable indirect costs such as electricity.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Which of the following statements about variable
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Variable overhead efficiency variance is not a useful control tool. |
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Variable overhead spending variance may be caused by lower than expected usage of direct labour hours. |
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Variable overhead spending variance is useful only as a product costing tool. |
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Variable overhead efficiency variance highlights any inefficient uses of variable indirect costs such as electricity. |
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