Answer the following questions using the information below:
Gus Corporation manufactured 10,000 golf bags during April. The fixed overhead cost-allocation rate is $40.00 per machine-hour. The following fixed overhead data pertain to March:

-A favorable production-volume variance indicates that the company:
A)has good management
B)has allocated more fixed overhead costs than budgeted
C)has a total economic gain from using excess capacity
D)should increase capacity

Question

Answer the following questions using the information below:
Gus Corporation manufactured 10,000 golf bags during April. The fixed overhead cost-allocation rate is $40.00 per machine-hour. The following fixed overhead data pertain to March:
 
-A favorable production-volume variance indicates that the company:
A)has good management 
B)has allocated more fixed overhead costs than budgeted 
C)has a total economic gain from using excess capacity 
D)should increase capacity

Quizplus · Accepted Answer

A favorable production-volume variance indicates that the company has produced more units than expected, leading to more fixed overhead costs being allocated than budgeted.

Answer the Following Questions Using the Information Below