Answer (B) is correct . The fixed overhead volume variance measures the effect of not operating at the budgeted (denominator) activity level. It is the difference between budgeted fixed costs and the product of the standard fixed overhead application rate and the standard activity level for the actual output. A favorable variance means that activity was greater than expected and that fixed overhead was overapplied. It might be caused by, for example, hiring more workers to provide an extra shift. An unfavorable volume variance means that activity was less than budgeted (overhead was underapplied), for example, because of insufficient sales or a labor strike. Accordingly, the volume variance is usually outside the control of production management. Moreover, unlike other variances, it does not directly reflect a difference between actual and budgeted expenditure of resources.
Answer (A) is incorrect because The volume variance is not related to direct labor.
Answer (C) is incorrect because The volume variance is not related to overhead efficiency.
Answer (D) is incorrect because The volume variance is not related to overhead use.
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