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:

Predetermined Overhead Rate

This refers to the rate used to allocate manufacturing overhead costs to individual products or job orders, calculated before the accounting period begins based on estimated costs and activity levels.

Machine-hour

A measure of the amount of time a machine is operated, used in calculating manufacturing costs and setting production schedules.

Predetermined Manufacturing Overhead

A calculation used to estimate the total manufacturing overhead costs for a certain period, often used for budgeting and cost management in production.

Machine-hours

A measure of the amount of time machines are utilized in the production process.