Which of the following is not correct?
A) If the denominator level of activity and the standard hours allowed for the output of the period are the same, then there is no volume variance.
B) If the denominator level of activity is greater than the standard hours allowed for the output of the period, then the volume variance is unfavorable.
C) If the denominator level of activity is greater than the standard hours allowed for the output of the period, then the volume variance is favorable.
D) The volume variance is the most appropriate measure of the utilization of plant facilities.

Question

Quizplus · Accepted Answer

If the denominator level of activity is greater than the standard hours allowed for the output of the period, then the volume variance is favorable. This is because the actual level of activity exceeded the standard level of activity, resulting in higher output than expected and therefore a favorable variance. Option A is correct if both levels are the same, there is no variance. Option B states an unfavorable variance when the denominator level is greater than the standard hours, which is incorrect. Option D is also incorrect as the volume variance is not directly related to plant facility utilization.

Which of the Following Is Not Correct