(Appendix 11A)A company has a standard cost system in which fixed and variable manufacturing overhead costs are applied to products on the basis of direct labor-hours.The company's choice of the denominator level of activity affects the fixed manufacturing overhead budget variance.

Question

Quizplus · Accepted Answer

The choice of the denominator level of activity affects the fixed manufacturing overhead volume variance, not the budget variance. The budget variance is determined by the difference between actual and budgeted fixed overhead costs, independent of the denominator level.

(Appendix 11A)A Company Has a Standard Cost System in Which