Salvador Company has developed capacity standards. Information is as follows for a value-added activity: $$\begin{array} { l r }
\text { Activity capacity acquired } & 60 \
\text { Activity capacity used } & 50 \
\text { Actual activity usage } & 30 \
\text { Standard fixed activity rate } & \$ 2,000
\end{array}$$ The volume variance is
A)There is no variance.
B)$40,000 unfavorable.
C)$60,000 unfavorable.
D)$20,000 unfavorable.

Question

Salvador Company has developed capacity standards. Information is as follows for a value-added activity: $$\begin{array} { l r } 
\text { Activity capacity acquired } & 60 \
\text { Activity capacity used } & 50 \
\text { Actual activity usage } & 30 \
\text { Standard fixed activity rate } & \$ 2,000
\end{array}$$ The volume variance is
A)There is no variance.
B)$40,000 unfavorable.
C)$60,000 unfavorable.
D)$20,000 unfavorable.

Quizplus · Accepted Answer

The volume variance is calculated as the difference between the activity capacity used and the actual activity usage, multiplied by the standard fixed activity rate. Here, it is (50 - 30) * $2,000 = 20 * $2,000 = $40,000 unfavorable.

Salvador Company Has Developed Capacity Standards The Volume Variance Is A)There Is No Variance

Salvador Company Has Developed Capacity Standards The Volume Variance Is
A)There Is No Variance