Question

12) The *variable overhead flexible-budget variance* can be further subdivided into the ________.

A) price variance and the efficiency variance
B) static-budget variance and sales-volume variance
C) spending variance and the efficiency variance
D) sales-volume variance and the spending variance

Answer 1

The variable overhead flexible-budget variance breaks down into the spending variance and the efficiency variance, which assess cost management and resource utilization, respectively.The correct answer is option C.

Step-by-step explanation:

The variable overhead flexible-budget variance can be further subdivided into the spending variance and the efficiency variance.

The spending variance indicates how well the business managed its variable overhead costs in relation to the flexible budget, which can fluctuate with changes in production volume.

The efficiency variance measures how efficiently the company utilized its resources to produce output, taking into account the actual variable overhead costs incurred versus the expected costs for the actual output.The correct answer is option C.