Rameriz Company erred in selecting a denominator activity and chose a much higher level than was realistic. This error would most likely result in a large
A)favourable variable overhead efficiency variance.
B)favourable fixed overhead budget variance.
C)unfavourable overhead volume variance.
D)unfavourable fixed overhead budget variance.

Question

Quizplus · Accepted Answer

Choosing a higher level than what is realistic for the denominator activity leads to an unfavorable overhead volume variance because the actual overhead incurred will be higher than the budgeted overhead allocated to products or services, resulting in a unfavorable variance.

Rameriz Company Erred in Selecting a Denominator Activity and Chose