The Unused Capacity Variance Is

question 8

Multiple Choice

The unused capacity variance is

• A)the difference in costs between activity availability and activity usage.
• B)the difference in costs between actual activity level acquired and the value-added standard quantity of activity that should have been used.
• C)the difference in costs between practical capacity of activity and the standard capacity of the activity.
• D)none of these.

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Definitions:

Fixed Costs

Costs that do not change with the level of production or sales, such as rent or salaries.

Average Total Costs

The total expenses incurred in the process of producing or offering a good or service, divided by the quantity of goods or services produced or offered.

Average Variable Costs

The sum of all variable production costs divided by the total number of units produced.

Output

The amount of something produced by a person, machine, or industry.