Discount Sales Company uses standard costing to manage their direct costs and overhead costs. Overhead costs are allocated based on direct labor hours. In the first quarter, Discount Sales had a favorable cost variance for their variable overhead costs. Which of the following scenarios would be a reasonable explanation for that variance?

Question

Quizplus · Accepted Answer

A favorable cost variance for variable overhead costs means the actual variable overhead costs are lower than the budgeted costs.

Discount Sales Company Uses Standard Costing to Manage Their Direct