The capacity variance is composed of the unused capacity variance and
A)the activity volume variance.
B)the used capacity variance.
C)the activity benchmark.
D)the value-added standard.

Question

Quizplus · Accepted Answer

The unused capacity variance refers to the difference between the actual level of capacity utilization and the budgeted level of capacity utilization. The activity volume variance measures the difference between the actual level of activity and the budgeted level of activity. The used capacity variance is not a component of the capacity variance. The activity benchmark and value-added standard are not related to the capacity variance.

The Capacity Variance Is Composed of the Unused Capacity Variance