If actual units produced exceed the budgeted units to be produced, which of the following statements would be TRUE?

Question

Quizplus · Accepted Answer

If actual units produced exceed the budgeted units to be produced, the production volume variance is expected to be favourable. This is because the fixed overhead costs are spread over a larger number of units, resulting in lower cost per unit and a favourable variance. However, the fixed overhead budget variance may still be either favourable or unfavourable depending on the actual fixed overhead costs incurred.

If Actual Units Produced Exceed the Budgeted Units to Be