Question

The fixed overhead cost variance measures how well the business ________.A. keeps costs of variable overhead inputs within standardB. uses its variable overhead inputsC. keeps fixed overhead within standardD.explains why fixed overhead is under allocated or overallocated

Answer 1

Answer: Option C

                                               

Explanation: In simple words, fixed overhead cost variance refers to the difference between the actual overhead that are incurred and the standards that was predetermined by the accountants and production managers.

These estimates helps an organisation to evaluate their performance and detect the prelim because of which the expenditures are exceeding the expectations. Management can use this criteria to take corrective actions, therefore, it is of high importance.