The variable overhead spending variance is most effective in measuring
A)how well overhead spending matches the targets set in the original budget at the beginning of the year.
B)the efficiency with which the activity base was utilised in production.
C)excessive use of overhead resources.
D)the utilisation of plant facilities.

Question

Quizplus · Accepted Answer

The variable overhead spending variance measures the difference between actual and budgeted variable overhead costs, which can result from using more or less overhead resources than expected. Therefore, it is most effective in detecting excessive use of overhead resources, making choice C the best option. The variance does not directly measure how well overhead spending matches the targets set in the original budget (choice A), the efficiency with which the activity base was used (choice B), or the utilisation of plant facilities (choice D).

The Variable Overhead Spending Variance Is Most Effective in Measuring