A company may set predetermined overhead rates based on normal,expected annual,or theoretical capacity.At the end of a period,the fixed overhead spending variance would
A)be the same regardless of the capacity level selected.
B)be the largest if theoretical capacity had been selected.
C)be the smallest if theoretical capacity had been selected.
D)not occur if actual capacity were the same as the capacity level selected.

Question

Quizplus · Accepted Answer

The fixed overhead spending variance is the difference between actual fixed overhead costs and budgeted fixed overhead costs. It is not affected by the capacity level selected, as it is based on actual spending versus budgeted spending, not on the level of capacity used.

A Company May Set Predetermined Overhead Rates Based on Normal,expected