If the actual number of units produced is less than the number of units budgeted to produced, then the fixed overhead volume variance will always be unfavorable.

Question

Quizplus · Accepted Answer

The fixed overhead volume variance measures the difference between the budgeted fixed overhead costs and the fixed overhead costs incurred based on the actual number of units produced. If the actual number of units produced is less than the budgeted amount, then the fixed overhead costs will be spread over fewer units, resulting in a higher cost per unit and an unfavorable variance. Therefore, the statement is true.

If the Actual Number of Units Produced Is Less Than