A favorable fixed overhead volume variance occurs if
A)there is a favorable labor efficiency variance.
B)there is a favorable labor rate variance.
C)production is less than planned.
D)production is greater than planneD.

Question

Quizplus · Accepted Answer

Fixed overhead volume variance is the difference between the budgeted fixed overhead and the fixed overhead applied based on the actual level of production. If the actual level of production is greater than planned (i.e. higher sales), then the fixed overhead volume variance will be favorable because more products were produced to absorb the fixed overhead costs. Therefore, option D is the correct answer.

A Favorable Fixed Overhead Volume Variance Occurs If