What may cause an unfavourable variable overhead spending variance?
A)the use of excessive quantities of variable overhead items
B)the payment of lower prices for variable overhead items used
C)the use of excessive quantities of the variable overhead allocation base
D)the payment of higher direct materials purchases

Question

Quizplus · Accepted Answer

An unfavourable variable overhead spending variance occurs when the actual costs of variable overhead items used are higher than the budgeted costs. This can happen if the company uses excessive quantities of variable overhead items or if the prices of these items increase. Therefore, option A is the correct answer as it mentions the use of excessive quantities of variable overhead items as the cause of unfavourable variance. Options B and D are not relevant to the variable overhead spending variance, and option C refers to the variable overhead efficiency variance.

What May Cause an Unfavourable Variable Overhead Spending Variance