Asked by Natali Hernandez-Chavez on Jul 11, 2024
Verified
The variance from standard for factory overhead cost resulting from operating at a level above or below 100% of normal capacity is termed volume variance.
Volume Variance
The difference between the budgeted fixed overhead at 100% of normal capacity and the standard fixed overhead for the actual production achieved during the period.
Normal Capacity
The average level of operational output that a company can sustain with its current resources, over a specific period and under normal conditions.
- Illustrate the principle of variance and understand its utility in financial oversight and the appraisal of work efficiency.
Verified Answer
KK
Karrlana KinderJul 18, 2024
Final Answer :
True
Explanation :
This statement is true. Volume variance refers to the difference in factory overhead cost that results from operating at a level above or below 100% of normal capacity.
Learning Objectives
- Illustrate the principle of variance and understand its utility in financial oversight and the appraisal of work efficiency.