A company has budgeted overhead of $8,750 and standard overhead applied of $9,250. The volume variance is:

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards
From $25.99Unlock all

Prepare for the Accounting SmartBook Test. Practice with tailored questions and helpful hints. Analyze comprehensive explanations for a deep understanding. Ace your exam with confidence!

Multiple Choice

A company has budgeted overhead of $8,750 and standard overhead applied of $9,250. The volume variance is:

Explanation:
Volume variance shows how much overhead absorbed by production differs from what was budgeted, based on actual production volume. It is calculated as overhead applied to production minus the budgeted overhead. If this number is positive, it’s favorable because more overhead is allocated to products than planned, usually due to higher production volume which spreads fixed overhead over more units. Here, overhead applied is 9,250 and budgeted overhead is 8,750. 9,250 minus 8,750 equals 500, which is a favorable variance. So the volume variance is a $500 favorable amount.

Volume variance shows how much overhead absorbed by production differs from what was budgeted, based on actual production volume. It is calculated as overhead applied to production minus the budgeted overhead. If this number is positive, it’s favorable because more overhead is allocated to products than planned, usually due to higher production volume which spreads fixed overhead over more units.

Here, overhead applied is 9,250 and budgeted overhead is 8,750. 9,250 minus 8,750 equals 500, which is a favorable variance. So the volume variance is a $500 favorable amount.

More Multiple Choice Questions
Subscribe

Get the latest from Passetra

You can unsubscribe at any time. Read our privacy policy