A company may set predetermined overhead rates based on normal,expected annual,or theoretical capacity.At the end of a period,the fixed overhead spending variance would
A)be the same regardless of the capacity level selected.
B)be the largest if theoretical capacity had been selected.
C)be the smallest if theoretical capacity had been selected.
D)not occur if actual capacity were the same as the capacity level selecteD.

Question

Quizplus · Accepted Answer

The fixed overhead spending variance is influenced by the difference between the actual and budgeted fixed overhead costs, not by the capacity level selected. Therefore, it remains the same regardless of whether normal, expected annual, or theoretical capacity levels are used for setting predetermined overhead rates.

A Company May Set Predetermined Overhead Rates Based on Normal,expected