The difference between actual capacity used and budgeted capacity can be reflected in which variance?
A) Direct labour efficiency variance
B) Fixed overhead efficiency variance
C) Variable overhead efficiency variance
D) Production volume variance

Question

Quizplus · Accepted Answer

The difference between actual capacity used and budgeted capacity is typically reflected in the production volume variance. This variance measures the difference between the budgeted fixed overhead cost and the actual fixed overhead cost based on the difference between the standard hours allowed for the actual output and the budgeted hours for the actual output.

The Difference Between Actual Capacity Used and Budgeted Capacity Can