Question

The unfavorable volume variance may be due to all of the following factors except:_______

a. failure to maintain an even flow of work
b. machine breakdowns
c. failure to obtain enough sales orders
d. unexpected increases in the cost of utilities

Answer 1

Answer:

d. unexpected increases in the cost of utilities

Explanation:

there are several volume variances:

• direct materials volume variance
• direct labor volume variance
• manufacturing overhead volume variance
• sales volume variance

Utilities are part of manufacturing overhead, but volume variances using the standard rates, so an unexpected increase in the cost of utilities will not affect the overhead volume variance.

Answer 2

The unfavorable volume variance can not be due because of unexpected Increases in the cost of utilities

Unfavorable volume variance means that the amount of applied fixed manufacturing overhead costs is less than the budgeted fixed manufacturing overhead costs

• The machine breakdowns will affect production levels, thus, resulting to unfavorable volume variance.

• The failure to maintain even flow of work will impact the production quantities, thus, resulting to unfavorable volume variances

• The failure to obtain enough sales order will limit production quantities, thus, resulting to unfavorable volume variances.

Thus, the Option D is correct because unfavorable volume variance can not be due because of unexpected Increases in the cost of utilities

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