Which of the following is indicated by a favorable fixed overhead volume variance of a manufacturing company?
A)The creation of excess inventory
B)The actual overhead exceeded the budgeted overhead
C)Sales exceeded production
D)Variable overhead costs were less than fixed overhead costs

Question

Quizplus · Accepted Answer

A favorable fixed overhead volume variance indicates that a company produced more units than expected, which can lead to the creation of excess inventory. This variance measures the difference between the budgeted and applied fixed overhead based on actual production volumes, so producing more than planned can result in a favorable variance, reflecting efficiency in production but potentially leading to excess inventory if not matched by sales.

Which of the Following Is Indicated by a Favorable Fixed