How is the fixed overhead volume variance calculated?
A)The difference between the standard fixed overhead rate and the actual fixed overhead rate multiplied by the actual hours used
B)The difference between the standard fixed overhead costs allocated to production and the budgeted fixed overhead costs
C)The difference between the actual fixed overhead costs incurred and the budgeted fixed overhead costs
D)The difference between the actual fixed overhead costs incurred and the standard fixed overhead costs allocated

Question

Quizplus · Accepted Answer

The fixed overhead volume variance is calculated as the difference between the standard fixed overhead costs allocated to production (based on standard hours allowed for the actual output) and the budgeted fixed overhead costs. This variance measures the efficiency in utilizing the production capacity.

How Is the Fixed Overhead Volume Variance Calculated