Question

Rowe Corporation reported the following variances for the period just ended: Variable-overhead spending variance: 50,000U Variable-overhead efficiency variance: 28,000U Fixed-overhead budget variance: 70,000U Fixed-overhead volume variance: 30,000U If Rowe desires to analyze variances that arose primarily from managers' expenditures in excess of anticipated amounts, the company should focus on variances that total:

1) 50,000U
2) 70,000U
3) 120,000U
4) 178,000U
5) some other amount

Answer 1

The average fixed cost curve is downward-sloping, decreasing as output increases. Spreading the overhead refers to distributing fixed costs over a larger quantity of output, reducing the average fixed cost per unit.

Step-by-step explanation:

The average fixed cost curve is a downward-sloping curve that starts high at low levels of output and decreases as output increases. When fixed costs are spread over a larger quantity of output, the average fixed cost per unit decreases.

Spreading the overhead refers to the process of distributing the fixed costs across a larger quantity of output, which helps reduce the average fixed cost per unit. This allows for a more efficient use of resources and can lead to economies of scale.