Discount Sales Company uses standard costing to manage its direct and overhead costs.Overhead costs are allocated based on direct labor hours.In the first quarter,Discount Sales had a favorable cost variance for its 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 suggests that the actual variable overhead costs were lower than the budgeted costs. This could be due to various reasons, such as efficient use of resources, lower prices of inputs or better production planning. The actual number of direct labor hours is not relevant to the variable overhead cost variance.

Discount Sales Company Uses Standard Costing to Manage Its Direct