If Actual Capacity Used Exceeds Expected Capacity, the Fixed Overhead

question 84

True/False

If actual capacity used exceeds expected capacity, the fixed overhead volume variance is favorable.

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Definitions:

Relevant Range

The range of activity within which assumptions about variable and fixed cost behavior are valid.

Cost

A sacrifice made to obtain some benefit.

Activity

In accounting and finance, it typically refers to the level of business operations or transactions in a given period.

Relevant Activity Base

A factor that causes changes in the behavior of costs, used to allocate fixed costs to cost objects effectively.