firm’s production facilities were under-utilized by producing less units of products than budgeted. Fixed overhead variances consist of a budget variance and a volume variance. The volume variance is a measure of facility utilization.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Which of the following statements about fixed
An unfavorable volume variance means that a firm’s production facilities were under-utilized by producing less units of products than budgeted.
Fixed overhead variances consist of a
The volume variance is a measure of facility utilization.
The budget variance represents the difference between the original budgeted fixed overhead cost and the applied fixed overhead cost during a period.
Step by step
Solved in 3 steps
