A favorable fixed overhead volume variance occurs if
A)there is a favorable labor efficiency variance.
B)there is a favorable labor rate variance.
C)production is less than planned.
D)production is greater than planned.

Question

Quizplus · Accepted Answer

The fixed overhead volume variance measures the difference between the actual overhead incurred and the budgeted overhead based on the level of production planned. If production is greater than planned, it means that more units were produced than anticipated, resulting in a lower fixed overhead per unit and therefore a favorable variance. Therefore, choice D is correct. The other choices are unrelated to the fixed overhead volume variance.

A Favorable Fixed Overhead Volume Variance Occurs If