Responsibility for the Fixed Overhead Volume Variance Is

question 24

Multiple Choice

Responsibility for the fixed overhead volume variance is

• A) not assigned because fixed overhead costs do not change with activity changes.
• B) usually assigned to the production department.
• C) usually assigned to top management.
• D) usually assigned to the planning department.
• E) None of these.

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Definitions:

Operating Income

EBIT, or earnings before interest and taxes, denotes the income a business generates from its fundamental activities.

Margin Of Safety

The difference between actual sales and break-even sales, providing a cushion against which performance can decline before a business incurs a loss.

Contribution Margin

Contribution Margin is the amount by which sales revenue exceeds variable costs of production, indicating how much revenue contributes to fixed costs and profit.

Break-even Point

The level of sales at which total revenues equal total costs, resulting in no profit or loss.