The Capacity Variance Is Composed of the Unused Capacity Variance

question 138

Multiple Choice

The capacity variance is composed of the unused capacity variance and

• A)the activity volume variance.
• B)the used capacity variance.
• C)the activity benchmark.
• D)the value-added standard.

---

Definitions:

Indirect Costs

Expenses not directly tied to a specific project or activity but necessary for the general operation of an organization, such as utilities, rent, and administrative salaries.

Fixed Costs

Expenses that do not change with the level of production or business activity, such as rent or salaries.

Cost-Benefit Analysis

A financial assessment comparing the costs and benefits of a project or decision to determine its worth.

Utility Analysis

A method used in human resources and organizational psychology to assess the economic value or effectiveness of interventions like training programs, by comparing costs and benefits.