Which of the following will cause a negative or favorable fixed overhead volume variance
A) An unexpected increase in direct labor hours
B) An unexpected increase in direct material costs
C) An unexpected increase in variable overhead costs
D) An unexpected increase in production

Question

Quizplus · Accepted Answer

A negative or favorable fixed overhead volume variance is caused by a difference between the actual production volume and the expected (or standard) production volume. An unexpected increase in production (D) would directly affect this variance, as it would mean more units were produced than planned, potentially leading to a favorable variance if fixed overhead costs are spread over more units, reducing the cost per unit. Choices A, B, and C do not directly affect fixed overhead volume variance, as they relate to labor hours, material costs, and variable overhead costs, respectively, rather than the volume of production.

Which of the Following Will Cause a Negative or Favorable