If a company was concerned with controlling expenditures on overhead items, which variance would be useful?
A) fixed overhead volume variance
B) variable overhead efficiency variance
C) variable overhead spending (expenditure)variance
D) both b and c

Question

Quizplus · Accepted Answer

The variable overhead spending (expenditure) variance would be useful in controlling expenditures on overhead items as it measures the difference between the actual cost incurred and the budgeted or standard cost for the actual level of activity. This variance helps identify the reasons for any deviations from the budgeted cost and provides insights into where to allocate resources for better cost control. The fixed overhead volume variance and variable overhead efficiency variance are useful in analyzing the impact of changes in activity levels and efficiency on overhead costs, respectively, but may not directly address the issue of controlling expenditures on overhead items. Therefore, option C is the best choice.

If a Company Was Concerned with Controlling Expenditures on Overhead