Guest Corporation estimated that total overhead cost would be $23,000 for the current year,but actual overhead costs were $25,500; as a result,Guest spent $2,500 more than expected for overhead cost.This type of variance is known as a(n):
A) material variance.
B) activity variance.
C) volume variance.
D) spending variance.

Question

Quizplus · Accepted Answer

The type of variance described is a spending variance, meaning that the actual costs were higher than the expected costs. A material variance relates to the cost of raw materials, an activity variance relates to the cost of specific activities, and a volume variance relates to the effect of changes in volume on costs.

Guest Corporation Estimated That Total Overhead Cost Would Be $23,000