A Fixed-Overhead Volume Variance Would Normally Arise When

question 35

Multiple Choice

A fixed-overhead volume variance would normally arise when:

• A) actual hours of activity coincide with actual units of production.
• B) budgeted fixed overhead is less than (or greater than) applied fixed overhead.
• C) there is a fixed-overhead budget variance.
• D) actual fixed overhead exceeds budgeted fixed overhead.
• E) there is a variable-overhead efficiency variance.

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Definitions:

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and considered a variable cost.

Factory Overhead

All indirect costs associated with manufacturing, such as indirect labor, maintenance, and utilities, that cannot be directly traced to specific units produced.

Manufacturing Costs

Expenses directly related to the production of goods, including direct materials, direct labor, and manufacturing overhead.

Work in Process Inventory

Goods partially completed during the manufacturing process, including labor, raw materials, and overhead costs.