segna da Cost Budget Cost from 0 to 50 units budget cost from 51 to 150 units actual cost Machinery energy (fixed quote) 15

Computation of Spending Overhead Variance:-

Formula for Spending Overhead Variance:

(Actual production volume x Actual variable overhead rate) - (Actual production volume x Budgeted variable overhead rate)

= (60*27) -(60*15)

= 1620-900

= 720(UnFavourable)

Solution:-

Variance analysis is not a single comparison it involves comparison between actual and budgeted for each elements of cost seperately to understand and identify the causes behind the variation / differences.

production variance is not composed by sales volume variance, direct labour variance and general and admin overhead varaince , formula for production variance is ( actual units produced - budgeted units produced ) * budgeted overhead rate

sales mix variance is not related with the gross contribution margin

sales price variance is the most relevant component of revenue variance.

Hence option no ( B) with variance analysis implies the identification of the specific causes of the difference is the correct answer and is the true statement.