US CMA Part 1 · Chapter 3 · Question 14 of 30
Which statement about the fixed overhead production volume variance is correct?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) It reflects the difference between the denominator level and actual output, and does not indicate whether fixed costs were over- or under-spent
Explanation
The production volume variance arises because fixed overhead is applied per unit. It measures capacity utilization relative to the denominator level, not spending or efficiency, and is often considered beyond the control of an individual department manager.
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