When there is no efficiency variance,the fixed overhead spending variance is ________ the overhead flexible budget variance.

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Quizplus · Accepted Answer

When there is no efficiency variance, the fixed overhead spending variance is essentially the difference between the actual fixed overhead incurred and the budgeted fixed overhead for the actual level of activity. Similarly, the overhead flexible budget variance is the difference between the actual overhead cost and the flexible budget amount based on the actual level of activity. If there is no efficiency variance, then the fixed overhead spending variance and overhead flexible budget variance would have been caused by the same factors (e.g., differences between actual and budgeted costs, differences between actual and budgeted activity levels, etc.) and would cancel each other out. Thus, they would be the same amount.

When There Is No Efficiency Variance,the Fixed Overhead Spending Variance