Allende Company has developed capacity standards.Information is as follows for a value-added activity:
-The volume variance is
A) $20,000 unfavorable.
B) $40,000 unfavorable.
C) $60,000 unfavorable.
D) There is no variance.

Question

Allende Company has developed capacity standards.Information is as follows for a value-added activity:  
-The volume variance is
A) $20,000 unfavorable. 
B) $40,000 unfavorable. 
C) $60,000 unfavorable. 
D) There is no variance.

Quizplus · Accepted Answer

The volume variance is calculated as the difference between the budgeted volume and the actual volume, multiplied by the standard cost per unit. The problem states a $20,000 unfavorable variance, indicating that the actual volume was less than the budgeted volume, leading to less revenue or higher costs than expected.

Allende Company Has Developed Capacity Standards