Which Statement Is True Concerning the Fixed Overhead Production Efficiency

question 79

Multiple Choice

Which statement is true concerning the fixed overhead production efficiency variance?

• A)The production efficiency variance exists as fixed costs are assumed to vary inversely with volume.
• B)The production efficiency variance exists as fixed costs are assumed to vary along with volume.
• C)The production efficiency variance exists as fixed costs are assumed to vary exponentially with volume.
• D)The production efficiency variance does not exist as fixed costs are assumed not to vary with volume.

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Definitions:

Economic Order Quantity

Economic Order Quantity (EOQ) is a formula used to determine the optimal quantity of inventory to order that minimizes total inventory costs, including holding and ordering costs.

Inventory System

A process or software used for tracking goods and materials held by a business, managing stock levels, orders, sales, and deliveries.

Productivity

The measure of the efficiency of a person, machine, factory, system, etc., in converting inputs into useful outputs.

Small Business Owner

An individual who owns and operates a small business, typically taking on considerable financial risks in the hope of profit.