The company uses two-variance analysis for overhead variances including flexible budget and production volume. The production volume variance is calculated as the difference between the factory overhead applied at standard costs and the total factory overhead in the master budget, which does not change with production volume.

1. A company uses a two-variance analysis for overhead variances, flexible-budget and production-
volume. The production-volume variance is the difference between the factory overhead applied
at standard and:
a.
Total factory overhead per the flexible budget.
b.
Actual factory overhead incurred.
c.
Total factory overhead per the master budget.
d.
Fixed overhead incurred.
a. Total factory overhead per the flexible budget.
b. Actual factory overhead incurred.
c. Total factory overhead per the master budget.
d. Fixed overhead incurred.
Solution
A company uses a two-variance analysis for overhead variances, flexible-budget and production-
volume. The production-volume variance is the difference between the factory overhead applied
at standard and:
c.Total factory overhead per the master budget.
Note : Production-volume variance = Budgeted factory Overhead - Standard Factory Overhead at
actual output