Which of the following variances is generally the least significant from the standpoint of cost control?
A)Materials price variance.
B)Labor efficiency variance.
C)Fixed manufacturing overhead volume variance.
D)Variable overhead rate variance.

Question

Quizplus · Accepted Answer

The fixed manufacturing overhead volume variance measures the difference between the budgeted fixed overhead cost and the actual fixed overhead cost incurred due to changes in production volume. As fixed overhead costs do not vary with the level of production activity, the volume variance is often considered the least significant variance from the standpoint of cost control. Materials price variance and labor efficiency variance are important variances as they directly impact the cost of production, while the variable overhead rate variance is also significant as it reflects the difference between the actual variable overhead rate and the standard variable overhead rate.

Which of the Following Variances Is Generally the Least Significant