Favorable Fixed Factory Overhead Volume Variances Are Never Harmful, Since

question 173

True/False

Favorable fixed factory overhead volume variances are never harmful, since achieving them encourages managers to run the factory above normal capacity.

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Definitions:

Activity Levels

Activity Levels in cost accounting refer to the volume of production or operations that can significantly influence costs, guiding how businesses adjust their spending and operational strategies.

Static Budget Report

A financial report based on the assumption of a fixed level of activity and expenditure, without adjusting for variations in actual performance.

Master Budget Activity Level

The projected volume of activity, such as sales or production, that is anticipated and used as a basis for the master budget.

Performance Report

A document that compares actual results to planned or budgeted results, often used in business to assess performance.