Capacity variance, calendar variance and expenditure variance
Capacity variance, calendar variance and efficiency variance
Capacity variance, expenditure variance and efficiency variance
Calendar variance, expenditure variance and efficiency variance
Answer is Right!
Answer is Wrong!
The correct answer is: C. Capacity variance, expenditure variance and efficiency variance
Volume variance is the difference between the actual production volume and the budgeted production volume. It is divided into three components:
- Capacity variance: This is the difference between the actual production capacity and the budgeted production capacity. It is caused by factors such as machine downtime, absenteeism, and overtime.
- Expenditure variance: This is the difference between the actual production costs and the budgeted production costs. It is caused by factors such as changes in the cost of materials, labor, and overhead.
- Efficiency variance: This is the difference between the actual production output and the budgeted production output. It is caused by factors such as worker productivity and machine efficiency.
The following is a brief explanation of each option:
- Option A: Capacity variance, calendar variance and expenditure variance. This is incorrect because calendar variance is not a component of volume variance. Calendar variance is the difference between the actual number of working days and the budgeted number of working days. It is caused by factors such as holidays and strikes.
- Option B: Capacity variance, calendar variance and efficiency variance. This is incorrect because calendar variance is not a component of volume variance. Calendar variance is the difference between the actual number of working days and the budgeted number of working days. It is caused by factors such as holidays and strikes.
- Option C: Capacity variance, expenditure variance and efficiency variance. This is the correct answer because it is the only option that includes all three components of volume variance.
- Option D: Calendar variance, expenditure variance and efficiency variance. This is incorrect because calendar variance is not a component of volume variance. Calendar variance is the difference between the actual number of working days and the budgeted number of working days. It is caused by factors such as holidays and strikes.