Which of the following examples may lead directly to a favorable fixed overhead volume variance?
A)A decrease in county property taxes for the factory
B)Producing more units than anticipated
C)A decrease in wages paid to factory maintenance workers
D)Receiving a volume discount on indirect materials purchased

Question

Quizplus · Accepted Answer

Producing more units than anticipated directly leads to a favorable fixed overhead volume variance because the actual production volume is higher than the expected volume, which means that the fixed overhead costs will be spread over a larger number of units, lowering the fixed overhead cost per unit and resulting in a favorable variance. The other options may impact the fixed overhead costs indirectly, but not directly lead to a favorable variance.

Which of the Following Examples May Lead Directly to a Favorable