The fixed overhead application rate is a function of a predetermined activity level.If standard hours allowed for good output equal the predetermined activity level for a given period,the volume variance will be
A)zero.
B)favorable.
C)unfavorable.
D)either favorable or unfavorable,depending on the budgeted overheaD.

Question

Quizplus · Accepted Answer

The volume variance measures the difference between the actual number of units produced and the budgeted level of production. However, if the standard hours allowed for good output equal the predetermined activity level, then the actual level of production will be the same as the budgeted level. Therefore, there will be no volume variance, and the answer is A) zero.

The Fixed Overhead Application Rate Is a Function of a Predetermined