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, but it is useful for product costing purposes as it helps in determining the actual fixed overhead cost incurred for a particular volume of production. This can be useful in assessing the profitability of a specific product or line. It is also important to note that the fixed overhead volume variance cannot be calculated without first calculating the fixed overhead budget variance.

The Fixed Overhead Volume Variance