Which of the following variances is sometimes referred to as the capacity variance?
A) Total fixed overhead flexible budget variance
B) Fixed overhead volume variance
C) Total variable overhead flexible budget variance
D) Fixed overhead budget variance

Question

Quizplus · Accepted Answer

The fixed overhead volume variance is sometimes referred to as the capacity variance because it measures the difference between the budgeted fixed overhead for the actual level of production and the fixed overhead applied to production, essentially reflecting the capacity utilization.

Which of the Following Variances Is Sometimes Referred to as the Capacity