What Could Cause a Production Volume Variance for Fixed Expenses

question 180

Multiple Choice

What could cause a production volume variance for fixed expenses?

• A) Insurance costs on the factory rise unexpectedly during the year due to a crisis in the insurance industry.
• B) The union calls for a strike of factory workers and temporary workers are hired to fill in for the striking employees.
• C) The lease on the manufacturing facility is renegotiated and the lease payments increase during the year.
• D) The number of units actually sold is different that the units upon which the static budget was based.

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Definitions:

Balance Sheet

A delineation of a company's financial status including assets, liabilities, and shareholders' equity at an exact point in time.

Liabilities

Sums of money or other financial obligations that a company is required to pay in the future to creditors, lenders, or suppliers.

Assets

Economic resources owned or controlled by a business, expected to provide future benefits.

Total Assets

The sum of all assets owned by a business, including both current and non-current assets.