If the standard hours allowed are less than the standard hours at normal capacity,
A)the overhead volume variance will be unfavourable.
B)variable overhead costs will be under-applied.
C)the overhead controllable variance will be favourable.
D)variable overhead costs will be over-applied.

Question

Quizplus · Accepted Answer

When the standard hours allowed are less than the standard hours at normal capacity, it means that the actual production volume is less than what was expected or planned. This leads to a situation where the fixed overhead costs are spread over a smaller number of units than anticipated, resulting in a higher cost per unit and an unfavorable overhead volume variance.

If the Standard Hours Allowed Are Less Than the Standard