Chapter 8 21. The fixed overhead volume variance measures the use of existing fa
ID: 2498731 • Letter: C
Question
Chapter 8
21. The fixed overhead volume variance measures the use of existing facilities and capacity.
a. True
b. False
22. If a company is operating at a capacity below its normal capacity in units, the fixed overhead volume variance will be favorable.
a. True
b. False
23. The responsibility of a production manager is limited to direct materials used.
a. True
b. False
24. It is not necessary to provide an area on the performance report for a manager's reasons for variances.
a. True
b. False
25. A performance report should contain cost or revenue items that the manager receiving the report can control.
a. True
b. False
Explanation / Answer
21. The fixed overhead volume variance measures the use of existing facilities and capacity.
The fixed overhead volume variance is the difference between the amount of fixed overhead actually applied to produced goods based on production volume, and the amount that was budgeted to be applied to produced goods.
a. True
22. If a company is operating at a capacity below its normal capacity in units, the fixed overhead volume variance will be favorable.
The allocation of fixed production overheads to the costs of conversion is based on the normal capacity of the production facilities. Normal capacity is the production expected to be achieved on average over a number of periods or seasons under normal circumstances, taking into account the loss of capacity resulting from planned maintenance. The actual level of production may be used if it approximates normal capacity
b. False
23. The responsibility of a production manager is limited to direct materials used.
Production manager is limited to direct materials & direct labor.
b. False
24. It is not necessary to provide an area on the performance report for a manager's reasons for variances.
Manager reason for variance is important because it make sure that each unit is profitable.Senior Manager of Store Operations. This person is concerned with making sure that each unit is profitable.Senior Manager of Store Operations. This person is concerned with making sure that each unit is profitable.Senior Manager of Store Operations. This person is concerned with making sure that each unit is profitable.
b. False
25. A performance report should contain cost or revenue items that the manager receiving the report can control.
manager can control revenues, costs, and the investments of assets to achieve the Profit
a. True
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