The fixed overhead volume variance
A) is useless, as it does not serve a control purpose. Rather, it is calculated only as a difference between total fixed overhead variance and fixed overhead budget variance.
B) is useless for control purposes, but allows managers to estimate capacity costs.
C) is useless for control purposes, but useful for product costing purposes.
D) is useful only when conducting two-way overhead variance analyses.

Question

Quizplus · Accepted Answer

The fixed overhead volume variance is not useful for control purposes as it does not provide any actionable information. However, it is useful for product costing purposes as it helps to allocate capacity costs to products based on their production volumes.

The Fixed Overhead Volume Variance