Which of the following statements is true?
A) The fixed manufacturing sales-volume variance is rarely zero.
B) The difference between the allocated and the budgeted overhead is the production-volume variance.
C) The production-volume variance arises for both fixed and variable costs.
D) The fixed manufacturing overhead sales-volume variance can be written-off to cost of goods sold.
E) The production-volume variance arises only for variable costs.

Question

Quizplus · Accepted Answer

The production-volume variance is the difference between the allocated overhead (which is based on actual production) and the budgeted overhead (which is based on the estimated production level). This applies to both fixed and variable costs. The fixed manufacturing sales-volume variance arises when actual production is different from the estimated production level, but this variance cannot be written off to cost of goods sold.

Which of the Following Statements Is True