The Fixed Overhead Volume Variance Is a Measure of

question 198

Multiple Choice

The fixed overhead volume variance is a measure of

• A) the cost of overspending on fixed overhead items.
• B) the effect of the actual output differing from the output used to calculate the predetermined fixed overhead rate.
• C) the cost of unused activity capacity acquired.
• D) both the cost of overspending on fixed overhead items and the effect of the actual output differing from the output used to calculate predetermined fixed overhead rate.
• E) both the effect of the actual output differing from the output used to calculate the predetermined fixed overhead rate and the cost of unused activity capacity.

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Definitions:

Operating Activities

Transactions and events that affect the net income of a business, involving the primary revenue-producing activities of the entity.

Indirect Method

A method used in cash flow statement preparation that starts with net income and adjusts for changes in balance sheet accounts to arrive at cash provided by operating activities.

Cash Dividends

Earnings distributed by a company to its investors, usually representing a portion of profits.

Financing Activities

Transactions involving changes in the equity and borrowing of a firm as reported in its cash flow statement.