Which of the following is likely to cause an adverse fixed overhead variance?
A) Unexpectedly large maintenance expense
B) Inflation
C) "Fixed overheads" were not as fixed as first thought and increased as production increased
D) All of the above

Question

Quizplus · Accepted Answer

All of the options can cause an adverse fixed overhead variance. An unexpectedly large maintenance expense or inflation can increase the fixed overhead cost beyond what was budgeted. In addition, if the initial assumption that fixed overheads would remain constant as production increased turns out to be incorrect, it can lead to an unfavorable fixed overhead variance.

Which of the Following Is Likely to Cause an Adverse