Question

g) When the variance is due to the difference between
actual overhead and applied overhead, it is called as:
i) Efficiency variance
ii) Total overhead variance
iii) Spending variance
iv) Volume variance​

Answer 1

Explanation:

iii) Spending variance

This is the correct answer.

Answer 2

Answer:

Option 3) ( Spending variance) is the correct answer.

Explanation:

• Efficiency variance: The difference between the theoretical amount of inputs required to produce a unit of output and the actual number of inputs.
• Total overhead variance: The difference between the standard cost of overhead allowed for the actual output achieved and the actual overhead cost incurred.
• Volume variance​: The difference between the actual quantity sold and the budgeted amount expected to be sold, multiplied by the standard price per unit.
• Spending variance: The difference between the actual amount of a particular expense and the expected amount of the expense.

The spending variance is the variance that is due to the difference between actual overhead and applied overhead.

Hence, option 3) ( Spending variance) is the correct answer.