Understanding Production Volume Variance and Costing Methods
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The Production Volume Variance
Represents the difference between budgeted (incurred) and actual (allocated) fixed manufacturing costs.
When a greater proportion of costs are fixed costs, then
when demand is low the risk of loss is high
FALSE?
Gross Margin will always be greater than contribution margin.
Given a constant contribution margin per unit and constant fixed costs, the period-to-period change in operating income under variable costing is driven solely by:
changes in the quantity of units actually sold
In CVP analysis, the amount of units to be sold for the company to break even:
Increases when the contribution margin per unit decreases, all other things being equal
FALSE?
Nonmanufacturing costs are expensed in the future under variable costing.... Continue reading "Understanding Production Volume Variance and Costing Methods" »