If the Denominator Activity (In Hours) Used to Compute the Predetermined

question 1

True/False

If the denominator activity (in hours) used to compute the predetermined overhead rate is equal to the actual activity (in hours) for the period, then there is no volume variance.

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Definitions:

Short Run

A period of time in economics during which at least one input, such as plant size, is fixed and cannot be changed.

Fixed Costs

Expenses that do not change with the level of output produced, such as rent, salaries, and insurance.

Real Opportunity Cost

The value of the best alternative forgone as a result of making a particular choice, expressed in terms of real goods and services.

Producing Product

The process of creating goods or services that are offered in the market for consumption or use.