Which of the following statements is NOT correct?
A) If the denominator level of activity and the standard hours allowed for the output of the period are the same, then there is no volume variance.
B) If the denominator level of activity is greater than the standard hours allowed for the output of the period, then the volume variance is unfavourable.
C) If the denominator level of activity is greater than the standard hours allowed for the output of the period, then the volume variance is favourable.
D) The volume variance is the most appropriate measure of the utilization of plant facilities.

Question

Quizplus · Accepted Answer

C is not correct because if the denominator level of activity is greater than the standard hours allowed for the output of the period, it indicates that the actual production was less than what was planned or expected, leading to an unfavourable volume variance, not a favourable one.

Which of the Following Statements Is NOT Correct