An unfavorable variable overhead spending variance may be caused by

a. the payment of lower prices for variable overhead items used.

b. the use of excessive quantities of variable overhead items.

c. the use of excessive quantities of the variable overhead allocation base.

d. both the use of excessive quantities of variable overhead items and the payment of lower prices for variable overhead items used.

Question

Business

Roderick Pope

30 December, 10:34

An unfavorable variable overhead spending variance may be caused by

a. the payment of lower prices for variable overhead items used.

b. the use of excessive quantities of variable overhead items.

c. the use of excessive quantities of the variable overhead allocation base.

d. both the use of excessive quantities of variable overhead items and the payment of lower prices for variable overhead items used.

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Answers (1)

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Abigail · Answer 1

b. the use of excessive quantities of variable overhead items.

Explanation:

Variable overhead spending variance represents the difference in between standard and actual cost of overheads. That is it is unfavorable when the standard cost is less than actual cost.

This is possible because of rate of overheads being more in actual and lower in standard, or simply the quantity used is more in actual than the standard.

Here in the given options also this is the most favorable possibility as this will make actual cost more than the standard variable overhead cost.