When there is a difference between the actual volume of production and the standard volume of production, which of the following, based solely on fixed overhead, occurs:
A) Volume variance.
B) Production variance.
C) Quantity variance.
D) Overhead cost variance.
E) Controllable variance.

Question

Quizplus · Accepted Answer

A difference between the actual volume of production and the standard volume of production, based solely on fixed overhead, is known as volume variance. This variance occurs due to a difference in the level of activity expected, as compared to the actual level of activity incurred, resulting in a change in fixed overhead cost, which is not impacted by variable costs. Therefore, option A is the correct choice.

When There Is a Difference Between the Actual Volume of Production