The Production Volume Variance Must Be Computed When a Company

question 65

Multiple Choice

The production volume variance must be computed when a company uses:

• A) activity-based costing.
• B) process costing.
• C) job-order costing.
• D) full-absorption costing.

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Definitions:

Conversion Cost

The sum of direct labor and manufacturing overhead costs, representing the expenses necessary to convert raw materials into finished goods.

Materials

Substances or components that are used in the manufacturing or production process to create goods and products.

Molding Department

A specific section within a manufacturing facility dedicated to the process of shaping materials using rigid frames or models called molds.

Conversion Costs

The combined costs of direct labor and manufacturing overheads, which are incurred to convert raw materials into finished products.