Which of the following is NOT true for fixed manufacturing overhead costs in a standard costing system?
A) No efficiency variance is ever reported.
B) Any volume variance is the result of applying fixed manufacturing overhead to products,not the result of poor cost control.
C) Any underapplied or overapplied fixed manufacturing overhead is the same as the volume variance.
D) The budget variance can arise under either a variable product costing system or an absorption product costing system.

Question

Quizplus · Accepted Answer

Underapplied or overapplied fixed manufacturing overhead costs arise due to the differences between the actual fixed overhead costs incurred and the budgeted fixed overhead costs established for the standard costing system. This is not the same as the volume variance, which occurs due to changes in the level of activity or output. A volume variance arises due to fixed manufacturing overhead being applied to products based on a predetermined rate, which differs from the actual fixed overhead costs incurred at the actual level of activity or output. Choice A, B, and D are all true statements about fixed manufacturing overhead costs in a standard costing system.

Which of the Following Is NOT True for Fixed Manufacturing