Allende Company has developed capacity standards. Information is as follows for a value-added activity:
$$\begin{array} { l }
\text { Activity capacity acquired }&60 \
\text { Activity capacity used } &50\
\text { Actual activity usage }&30 \
\text { Standard fixed activity rate }&\$2,000
\end{array}$$
-Refer to the figure.What is the volume variance?
A)$20,000 unfavourable
B)$40,000 unfavourable
C)$50,000 unfavourable
D)$60,000 unfavourable

Question

Allende Company has developed capacity standards. Information is as follows for a value-added activity:
$$\begin{array} { l } 
\text { Activity capacity acquired }&60 \
\text { Activity capacity used } &50\
\text { Actual activity usage }&30 \
\text { Standard fixed activity rate }&\$2,000
\end{array}$$
-Refer to the figure.What is the volume variance?
A)$20,000 unfavourable
B)$40,000 unfavourable
C)$50,000 unfavourable
D)$60,000 unfavourable

Quizplus · Accepted Answer

Volume variance = (Standard fixed activity rate * (Capacity acquired - Capacity used))= $2,000 * (60 - 50)= $20,000 unfavourable

Allende Company Has Developed Capacity Standards -Refer to the Figure