A company has a standard cost system in which fixed and variable manufacturing overhead costs are applied to products on the basis of direct labor-hours. A fixed manufacturing overhead volume variance will NOT necessarily occur in a month in which there is a fixed manufacturing overhead budget variance.

Question

Quizplus · Accepted Answer

A fixed manufacturing overhead volume variance will only occur when the actual activity level differs from the budgeted activity level. A fixed manufacturing overhead budget variance will occur when the actual fixed manufacturing overhead costs differ from the budgeted fixed manufacturing overhead costs. These two variances are independent of each other.

A Company Has a Standard Cost System in Which Fixed