Asked by Priyani Patel on Jun 20, 2024
Verified
Favorable fixed factory overhead volume variances are never harmful, since achieving them encourages managers to run the factory above normal capacity.
Fixed Factory Overhead Volume Variances
The difference between budgeted and actual fixed overhead costs, attributed to variations in production volume.
Normal Capacity
The average production or operating levels that a company can sustain under normal circumstances over a period.
- Acquire knowledge on variance analysis, focusing on the calculation and explanation of different kinds of variances.
- Understand the significance of standards and variances for effective production and cost management.
Verified Answer
IC
Ivonne CortesJun 23, 2024
Final Answer :
False
Explanation :
Favorable fixed factory overhead volume variances can be harmful as they might encourage overproduction, leading to increased inventory costs and potential waste of resources if the produced goods are not sold.
Learning Objectives
- Acquire knowledge on variance analysis, focusing on the calculation and explanation of different kinds of variances.
- Understand the significance of standards and variances for effective production and cost management.
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