Froelech Company Has Developed Capacity Standards What Is the Volume Variance?
A)$10,000 Unfavourable
B)$10,000 Favourable
C)$50,000

question 51

Multiple Choice

Froelech Company has developed capacity standards.Information about a non-value-added activity is as follows: $\begin{array}{llr} \text {Standard cost of the activity capacity acquired } &\$50,000\\ \text { Standard cost of the activity capacity used } &0\\ \text { Standard cost of the actual activity used} &40,000\end{array}$
What is the volume variance?

• A)$10,000 unfavourable
• B)$10,000 favourable
• C)$50,000 unfavourable
• D)$50,000 favourable

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Definitions:

Return on Investment

The ratio of net profit to cost of investment, indicating the efficiency of an investment in generating profit.

Responsibility Level

The scope of authority and accountability designated to individuals or departments within an organization, often related to budgeting and costs.

Controllable Costs

Costs that can be influenced or changed by management decisions in the short term.

Master Budget

A comprehensive financial planning document that consolidates all of a company’s individual budgets, including sales, production, and expenses, for a specific period.