Volume variances are calculated for which of the following reasons?
I. GAAP requires that actual costs be recorded in the income statement and balance sheet
II. Estimates are used for allocation rates so that costs can be allocated when actual costs are not yet known
III. Only CRA requires volume variances in the calculation of income taxes
A)I only
B)II only
C)I and II only
D)I, II, and III

Question

Quizplus · Accepted Answer

Volume variances are calculated to account for the difference between actual costs and budgeted costs due to changes in the level of activity. Estimates are used for allocation rates so that costs can be allocated when actual costs are not yet known.

Volume Variances Are Calculated for Which of the Following Reasons