Answered: a. Actual overhead costs below applied…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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As part of her annual review of her company’s budgets versus actuals, Mary Gerard isolates unfavorable variances with the hope of getting a better understanding of what caused them and how to avoid them next year. The variable overhead efficiency variance was the most unfavorable over the previous year, which Gerard will specically be able to trace to:

a. Actual overhead costs below applied overhead costs.
b. Actual production units below budgeted production units.
c. Standard direct labor hours below actual direct labor hours.
d. The standard variable overhead rate below the actual variable overhead rate.

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