An unfavorable fixed manufacturing overhead volume variance would be caused by:
A) actual fixed manufacturing overhead costs being greater than budgeted fixed manufacturing overhead costs.
B) actual fixed manufacturing overhead costs being greater than applied fixed manufacturing overhead costs.
C) fixed manufacturing overhead cost being overapplied for the period.
D) the denominator hours exceeding the standard hours allowed for the output of a period.

Question

Quizplus · Accepted Answer

The fixed manufacturing overhead volume variance occurs when fixed overhead is applied to a period based on standard hours allowed for the output, but the actual denominator hours exceed the standard hours allowed for the output. This variance is unfavorable because it means that fixed overhead costs were applied to a smaller amount of output than originally anticipated, resulting in a higher cost per unit. Choices A and B both describe unfavorable fixed overhead spending variances, while choice C describes a favorable fixed overhead spending variance.

An Unfavorable Fixed Manufacturing Overhead Volume Variance Would Be Caused