ACCA MA · Chapter 13 · Question 2 of 10
Budgeted output was 10,000 units, with budgeted fixed overheads of $120,000 absorbed per unit. Actual output was 10,400 units. What is the fixed overhead volume variance?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $4,800 favourable
Explanation
OAR = 120,000 / 10,000 = $12 per unit. Volume variance = (actual output - budgeted output) x OAR = (10,400 - 10,000) x 12 = $4,800 favourable. Producing more than budget means more fixed overhead is absorbed, so the variance is favourable.
More Overhead and sales variances and operating statements MCQs
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- Q7Which variance appears in a standard absorption costing operating statement but NOT in a standard marginal costing operating statement?
- Q8A company has a favourable sales price variance and an adverse sales volume variance. Which of the following is the most likely explanation?