A Favorable Fixed Overhead Volume Variance for a Manufacturing Company

question 86

Multiple Choice

A favorable fixed overhead volume variance for a manufacturing company could indicate

• A) the creation of excess inventory.
• B) the actual overhead exceeded the budgeted overhead.
• C) sales exceeded production.
• D) variable overhead costs were less than fixed overhead costs.

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Definitions:

Perfectly Inelastic Demand

A situation in which the demand for a product does not change as the price changes.

Perfectly Elastic Supply

describes a market situation where the quantity supplied can change infinitely in response to any change in price.

Elastic Demand

A situation where the demand for a product significantly changes in response to changes in the product's price.

Total Revenue

The sum of money a company earns from selling goods or providing services over a specified time frame.