An unfavorable variable overhead spending variance may be caused by
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) both a and b.

Question

Quizplus · Accepted Answer

A negative variable overhead spending variance means that the actual cost incurred was higher than the budgeted cost. This could be due to using excessive quantities of variable overhead items, such as electricity or indirect materials. Option B, paying lower prices for variable overhead items, would result in a positive variance. Option C refers to the variable overhead efficiency variance, which measures whether the quantity of the allocation base used was more or less than expected.

An Unfavorable Variable Overhead Spending Variance May Be Caused by