An unfavorable overhead volume variance indicates that:
A) Total fixed overhead has exceeded the standard amount budgeted.
B) Variance overhead per unit has exceeded the standard amount budgeted.
C) Actual production was less than the normal volume of output.
D) Actual production was more than the normal volume of output.

Question

Quizplus · Accepted Answer

An unfavorable overhead volume variance occurs when the actual production is less than the normal volume of output. This means that there is excess capacity that is not being used efficiently, resulting in higher fixed overhead costs per unit. Option A is incorrect because it refers to total fixed overhead, which is not related to overhead volume variance. Option B is incorrect because it refers to variance overhead per unit, which is not related to the volume of production. Option D is incorrect because it refers to actual production being more than the normal volume of output, which should result in a favorable overhead volume variance.

An Unfavorable Overhead Volume Variance Indicates That