The fixed factory overhead application rate is a function of a predetermined activity level.If standard hours allowed for good output equal this predetermined activity level for a given period,the volume variance will be: (CPA adapted)
A) zero.
B) favorable.
C) unfavorable.
D) either favorable or unfavorable,depending on the budgeted overheaD.
There is no volume variance when output = planned

Question

Quizplus · Accepted Answer

When the output level is equal to the predetermined activity level, there is no variance between the actual and budgeted production levels. Therefore, the volume variance will be zero.

The Fixed Factory Overhead Application Rate Is a Function of a Predetermined