A Favourable Production-Volume Variance Indicates That the Company

question 108

Multiple Choice

A favourable production-volume variance indicates that the company

• A)has good management.
• B)produced more than it has sold.
• C)has a total economic gain from using excess capacity.
• D)should increase capacity.
• E)has allocated more fixed overhead costs than budgeted.

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Definitions:

Transfer Prices

Prices charged for the selling of goods and services between subsidiaries or divisions within the same company.

Variable Cost

Expenses that change in proportion to the level of production or business activity.

Negotiation

A strategic discussion that resolves an issue in a way that both parties find acceptable, often used in business to finalize deals, terms, and prices.

Investment Turnover

A metric assessing how effectively a firm turns asset investments into revenue.