If the standard hours allowed for the actual output of the period is greater than the denominator level of activity (in hours),then the overhead volume variance will be favorable.

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Quizplus · Accepted Answer

This is because the overhead volume variance measures the difference between the overhead costs applied to production and the actual overhead costs incurred. If the standard hours allowed are greater than the denominator level of activity, it means that less overhead costs were incurred than expected, resulting in a favorable variance.

If the Standard Hours Allowed for the Actual Output of the Period