The formula for computing the overhead volume variance is
A) fixed overhead rate times (actual hours less standard hours allowed).
B) variable overhead rate times (actual hours less standard hours allowed).
C) fixed overhead rate times (normal capacity hours less standard hours allowed).
D) variable overhead rate times (normal capacity hours less standard hours allowed).

Question

Quizplus · Accepted Answer

The overhead volume variance measures the difference between the standard overhead allowed for the actual production level compared to the standard overhead allowed for the normal capacity level. Choice C reflects this calculation by multiplying the fixed overhead rate by the difference between the normal capacity hours and the standard hours allowed. The other choices do not use the normal capacity level in the calculation.

The Formula for Computing the Overhead Volume Variance Is