Which of the following is not correct?
A) If the denominator level of activity and the standard hours allowed for the output of the period are the same,then there is no volume variance.
B) If the denominator level of activity is greater than the standard hours allowed for the output of the period,then the volume variance is unfavourable.
C) If the denominator level of activity is greater than the standard hours allowed for the output of the period,then the volume variance is favourable.
D) The volume variance is an appropriate measure of the utilization of plant facilities.

Question

Quizplus · Accepted Answer

If the denominator level of activity is greater than the standard hours allowed for the output of the period, then the volume variance is favorable. This is because the actual output is higher than the expected output, resulting in higher productivity and efficiency. Option A is correct, as there will be no volume variance if the denominator level of activity and the standard hours allowed for the output of the period are the same. Option B is incorrect because if the denominator level of activity is greater than the standard hours allowed for the output of the period, there will be a capacity variance, not a volume variance. Option D is incorrect because the volume variance measures the difference between actual output and expected output and does not consider plant utilization directly.

Which of the Following Is Not Correct