Which statement is true concerning the fixed overhead production efficiency variance?
A)The production efficiency variance exists as fixed costs are assumed to vary inversely with volume.
B)The production efficiency variance exists as fixed costs are assumed to vary along with volume.
C)The production efficiency variance exists as fixed costs are assumed to vary exponentially with volume.
D)The production efficiency variance does not exist as fixed costs are assumed not to vary with volume.

Question

Quizplus · Accepted Answer

The production efficiency variance does not exist for fixed overhead because fixed costs are, by definition, not supposed to vary with the volume of production. They remain constant regardless of the level of production activity.

Which Statement Is True Concerning the Fixed Overhead Production Efficiency