A Fixed Overhead Volume Variance

question 6

Multiple Choice

A fixed overhead volume variance:

• A)Is prorated to Work in process, Finished Goods, and Cost of Goods Sold if it is a material amount
• B)Is always closed only to Cost of Goods Sold, even if it is a material amount
• C)Occurs when actual selling and administrative costs are different than allocated selling and administrative costs
• D)Occurs when actual fixed overhead costs are not identical to budgeted overhead costs

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Definitions:

Marginal Utility

Marginal utility is the additional satisfaction or benefit gained from consuming one more unit of a good or service, which tends to decrease as more units are consumed.

Individual Demand

This refers to the quantity of a good or service that a single consumer is willing and able to purchase at various prices, holding other factors constant.

Normal Good

A type of good for which demand increases when income increases, and falls when income decreases, but price remains constant.

Inferior Good

A type of good for which demand decreases as the income of individuals or the economy increases, opposite to what is observed with a normal good.