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Part $1$

$"$Overhead variances are interdependent rather than$$ independent." Give an example.

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Part $1$

A$.$

Interdependencies among the variances could arise for the spending and efficiency variances. For$$ example, if the chosen allocation base for the variable overhead efficiency variance is only one of several cost$$ drivers, the variable overhead spending variance will include the effect of the other cost drivers.

B$.$

Interdependencies among the variances could arise for the spending and efficiency variances. For$$ example, interdependencies can be induced when there are misclassifications of costs as fixed when they are$$ variable, and vice versa.

C$.$

This statement is false. Overhead variances are independent and do not affect one another.

D$.$

Both A and B$.$