Fixed overhead volume variance = (Actual output − Budgeted output) × ?
AStandard fixed rate per unit
BActual rate
CDifference of rates
DStandard variable rate
Answer & Solution
Correct answer: A. Standard fixed rate per unit
1. Fixed overhead volume variance captures the absorbed-vs-budgeted gap arising from volume changes.
2. Output difference is valued at the standard fixed rate per unit.
3. Using actual or variable rates would distort the meaning of the variance.
4. Hence the multiplier is standard fixed rate per unit.
_Source: ICAI BoS Inter Paper 3, Ch 13 "Standard Costing", §13.5.4 ¶3_
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