The accounting for 3-variance analysis is simpler than the 4-variance analysis, but some
information is lost because the variable and fixed overhead spending variances are combined
into a single total overhead spending variance.

Question

Quizplus · Accepted Answer

The statement is true. In a 3-variance analysis, the variable and fixed overhead spending variances are combined into the total overhead spending variance, which means that some information is lost. This makes the accounting simpler but reduces the level of detail available for analysis.

The Accounting for 3-Variance Analysis Is Simpler Than the 4-Variance