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# In the three-variance method of factory overhead analysis- _______ var.docx

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# In the three-variance method of factory overhead analysis- _______ var.docx

In the three-variance method of factory overhead analysis, _______ variance represents the difference between actual factory overhead incurred and budgeted factory overhead based on actual hours worked. A. quantity B. efficiency C. spending D. production-volume
Solution
Answer - C. Spending Variance.
Budgeted Factory Overhead based on actual hours worked= Actual hours x Standard Overhead Rate
Actual FactoryOverhead = Actual Hours x Actual Overhead Rate.
Spending Variance = Actual Hours x Standard Rate - Actual Hours x Standard Rate
= Actual Hours ( Standard Rate - Actual Rate)
So, From the Formula it is clear that this variance is occured due to change in rate from actual to standard.
Hence it is the spending varianance.
.

In the three-variance method of factory overhead analysis, _______ variance represents the difference between actual factory overhead incurred and budgeted factory overhead based on actual hours worked. A. quantity B. efficiency C. spending D. production-volume
Solution
Answer - C. Spending Variance.
Budgeted Factory Overhead based on actual hours worked= Actual hours x Standard Overhead Rate
Actual FactoryOverhead = Actual Hours x Actual Overhead Rate.
Spending Variance = Actual Hours x Standard Rate - Actual Hours x Standard Rate
= Actual Hours ( Standard Rate - Actual Rate)
So, From the Formula it is clear that this variance is occured due to change in rate from actual to standard.
Hence it is the spending varianance.
.

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### In the three-variance method of factory overhead analysis- _______ var.docx

1. 1. In the three-variance method of factory overhead analysis, _______ variance represents the difference between actual factory overhead incurred and budgeted factory overhead based on actual hours worked. A. quantity B. efficiency C. spending D. production-volume Solution Answer - C. Spending Variance. Budgeted Factory Overhead based on actual hours worked= Actual hours x Standard Overhead Rate Actual FactoryOverhead = Actual Hours x Actual Overhead Rate. Spending Variance = Actual Hours x Standard Rate - Actual Hours x Standard Rate = Actual Hours ( Standard Rate - Actual Rate) So, From the Formula it is clear that this variance is occured due to change in rate from actual to standard. Hence it is the spending varianance.