The Fixed Overhead Volume Variance Shows Why the Fixed Overhead

question 42

True/False

The fixed overhead volume variance shows why the fixed overhead is underallocated or overallocated because it is a cost variance.

---

Definitions:

Variable Overhead

Costs that vary with the level of production output, such as utilities and commissions.

Materials Price Variance

The difference between the actual cost of materials and the standard cost, multiplied by the actual quantity of materials used.

Variable Manufacturing Overhead

This refers to the manufacturing overhead costs that vary with the level of production, such as utilities or indirect materials.

Materials Price Variance

The variance between the standard cost and the actual expense of materials, factored by the number of materials acquired.