The variable production cost variances are computed using the units produced instead of the units sold.

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Quizplus · Accepted Answer

The statement is true, as production cost variances are calculated based on the units produced and not on the units sold. The reason for this is that production cost variances account for the difference between the actual cost of producing the units and the expected or standard cost of producing those units, which is determined based on the production plan. Therefore, the variances are based on the amount and cost of materials, labor, and overhead used in the production process, regardless of whether the units were sold or not.

The Variable Production Cost Variances Are Computed Using the Units