If a Company Uses a Two-Variance Analysis for Overhead Variances

Multiple Choice

If a company uses a two-variance analysis for overhead variances and uses a predetermined rate for absorbing manufacturing overhead, the volume variance is the:

A) Underapplied or overapplied variable cost element of overhead.
B) Underapplied or overapplied fixed cost element of overhead.
C) Difference in budgeted costs and actual costs of fixed overhead items.
D) Difference in budgeted costs and actual costs of variable overhead items.