Which one of the following reflects both price (rate) as well as efficiency (quantity) effects regarding individual variable overhead items?
A) Total variable overhead variance.
B) Variable overhead rate variance.
C) Variable overhead spending variance.
D) Variable usage variance.
E) Variable overhead efficiency variance.

Question

Quizplus · Accepted Answer

The Variable Overhead Spending Variance reflects both the rate (price) and efficiency (quantity) effects because it encompasses the total difference between the actual costs incurred for variable overhead and the expected (standard) costs based on the actual output. This variance captures both the difference in the rate paid for overhead items (price effect) and the difference in the quantity of the overhead items used (efficiency effect).

Which One of the Following Reflects Both Price (Rate) as Well