A company had the following information pertaining to two different cases:

-The fixed overhead volume variance arises because fixed-overhead accounting must serve two masters: the control-budget purpose and the
A) product-costing purpose.
B) period-costing purpose.
C) stockholders.
D) creditors.

Question

A company had the following information pertaining to two different cases:
 
-The fixed overhead volume variance arises because fixed-overhead accounting must serve two masters: the control-budget purpose and the
A) product-costing purpose. 
B) period-costing purpose. 
C) stockholders. 
D) creditors.

Quizplus · Accepted Answer

The fixed overhead volume variance arises because fixed overhead accounting must serve two masters: the control-budget purpose and the product-costing purpose. It is concerned with the difference between the actual output produced and the budgeted/estimated output, and how the fixed overhead costs are allocated to the actual production output. Therefore, option A is the best choice as it correctly identifies the purpose of fixed overhead accounting. Options B, C, and D are not relevant to this context.

A Company Had the Following Information Pertaining to Two Different