Fill in the Blank QuestionFill in the blank question.A(n) variance occurs when the company operates at a different capacity level than predicted.

In this context, the correct term to fill in the blank is "capacity variance."

Explanation

A capacity variance occurs when there is a difference between the expected level of activity for which costs are budgeted and the actual level of activity achieved. This type of variance is important for understanding efficiency and resource utilization within a company. When the capacity utilized is different from what was planned, it can lead to variations in overhead costs, impacting overall financial performance.

By identifying capacity variances, management can make informed decisions regarding production schedules, resource allocation, and operational adjustments to ensure better alignment with anticipated capacity levels in the future.