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 actual direct labor-hours differ from standard hours allowed.

Question

Quizplus · Accepted Answer

A fixed manufacturing overhead volume variance will only occur when the actual activity level differs from the budgeted activity level. Direct labor-hours are used to apply overhead costs, but they do not affect the budgeted fixed overhead costs.

A Company Has a Standard Cost System in Which Fixed