Cost Accounting (15th Edition)

Published by Prentice Hall
ISBN 10: 0133428702
ISBN 13: 978-0-13342-870-4

Chapter 8 - Flexible Budgets, Overhead Cost Variances, and Management Control - Assignment Material - Exercises - Page 319: 8-26(3)

Answer

Marissa might be willing to incur the unfavorable production-volume variance because it could be seen as the cost of maintaining flexibility and being prepared to handle increased production levels in the future. Keeping a facility capable of producing 1,200 pieces per month even when the actual production is lower allows the company to respond to increased demand without significant delays or setup costs.

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