Mathematics · Cost Accounting
PQ Co currently uses a standard absorption costing system. The fixed overhead variances extracted from the operating statement for November are: - Fixed production overhead expenditure variance: $5,800 adverse - Fixed production overhead capacity variance: $4,200 favourable - Fixed production overhead efficiency variance: $1,400 adverse If PQ Co decides to use standard marginal costing as the basis for variance reporting in the future, what variance for fixed production overhead would be shown in a marginal costing operating statement for November?
- 1No variance would be shown for fixed production overhead
- 2Expenditure variance: $5,800 adverse✓
- 3Volume variance: $2,800 favourable
- 4Total variance: $3,000 adverse
Correct answer
Expenditure variance: $5,800 adverse
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