23) Fixed costs for the period are by definition a lump sum of costs that remain unchanged and therefore the fixed overhead spending variance is always zero.

Diff: 2 Terms: 10

fixed overhead spending variance Objective: 5 AACSB: Reflective thinking11

24) Caution is appropriate before interpreting the production-volume variance as a measure of the economic cost of unused capacity.

Diff: 1 Terms: production-volume variance Objective: 5 AACSB: Ethical reasoning 25) The production-volume variance arises whenever the actual level of the denominator differs from the level used to calculate the budgeted fixed overhead rate.

Diff: 1 Terms: production-volume variance Objective: 5 AACSB: Reflective thinking26) The lump sum budgeted for fixed overhead will always be the same amount for the static budget and the flexible budget.

Diff: 2 Terms: fixed overhead flexible-budget variance Objective: 5 AACSB: 12

Reflective thinking27) A favorable production-volume variance arises when manufacturing capacity planned for is not used.

Diff: 1 Terms: production-volume variance Objective: 5 AACSB: Reflective thinking28) The fixed overhead flexible budget variance is the difference between actual fixed overhead costs and fixed overhead costs in the flexible budget.

Diff: 2 Terms: fixed overhead flexible-budget variance Objective: 5 AACSB: Reflective thinking29) An unfavorable production-volume variance always infers that management made a bad planning decision regarding the plant capacity.

Diff: 2 Terms: 13

production-volume variance Objective: 5 AACSB: Ethical reasoning14

30) Favorable overhead variances are always recorded with credits in a standard cost system.

Diff: 2 Terms: standard costing, total-overhead variance Objective: 5 AACSB: Reflective thinking 31) Under activity-based costing, the flexible-budget amount equals the static-budget amount for fixed overhead costs.

Diff: 2 Terms: fixed overhead flexible-budget variance Objective: 5 AACSB: Reflective thinking