It is possible for the overhead volume variance to be favorable and the overhead spending variance to be unfavorable.

Question

Quizplus · Accepted Answer

The overhead volume variance measures the impact of changes in production volume on the amount of overhead costs incurred. A favorable variance means that the actual production volume was higher than the budgeted volume, resulting in a lower overhead cost per unit. On the other hand, the overhead spending variance measures the difference between the actual overhead costs and the budgeted overhead costs, assuming the same level of production volume. An unfavorable variance means that the actual overhead costs were higher than the budgeted amount. Therefore, it is possible for the overhead volume variance to be favorable (due to higher production volume) and the overhead spending variance to be unfavorable (due to higher overhead costs per unit).

It Is Possible for the Overhead Volume Variance to Be