The cost of available but unused productive capacity is indicated by the:
A)fixed factory overhead volume variance.
B)direct labor cost time variance.
C)direct labor cost rate variance.
D)variable factory overhead controllable variance.

Question

Quizplus · Accepted Answer

The fixed factory overhead volume variance measures the cost of available but unused productive capacity. This variance arises due to the difference between the actual and budgeted production volume, leading to underutilization of fixed overhead resources. The other variances listed do not specifically relate to the cost of unused capacity.

The Cost of Available but Unused Productive Capacity Is Indicated