Lack of enough sales orders to keep a factory operating at normal capacity results in an unfavorable:
A) direct materials quantity variance.
B) fixed factory overhead volume variance.
C) budgeted variable factory overhead variance.
D) fixed factory overhead controllable variance.

Question

Quizplus · Accepted Answer

A lack of enough sales orders to keep a factory operating at normal capacity indicates that the factory overhead has not been fully absorbed, leading to a negative fixed factory overhead volume variance. This variance occurs when the fixed overhead costs are not fully utilized due to a decrease in production activity.

Lack of Enough Sales Orders to Keep a Factory Operating