Favorable volume variances may be harmful when
A) machine repairs cause work stoppages
B) supervisors fail to maintain an even flow of work
C) production in excess of normal capacity cannot be sold
D) All of these choices

Question

Quizplus · Accepted Answer

Favorable volume variances may result from producing more than the normal capacity, which may not be sold, leading to increased inventory costs and potential write-offs. Therefore, producing in excess of normal capacity can be harmful, even with a favorable volume variance. Options A and B may not necessarily be harmful in all cases, as machine repairs and uneven work flow may be necessary for the long-term health of the production process.

Favorable Volume Variances May Be Harmful When