Final answer:
The difference is known as the fixed overhead production-volume variance. It arises from the variation in expected versus actual output. Understanding this helps businesses manage their production efficiency and cost control. The correct option is D.
Step-by-step explanation:
The difference between budgeted fixed manufacturing overhead and the fixed manufacturing overhead allocated to actual output units achieved is called the fixed overhead production-volume variance. This variance reflects the amount by which the allocated overhead deviates from the budgeted amount, due to differences in the expected and actual output levels. It's important in cost accounting because it helps businesses understand how effectively they are using their production capacity.
Fixed costs, also known as overhead, do not change with the level of production. So, when a fixed cost is divided by the quantity of output produced, you get what's known as the average fixed cost. If the fixed cost is $1,000, the average fixed cost curve would be a hyperbola, starting high when production quantities are low and decreasing as production quantity increases.
This illustrates the concept of spreading the overhead, where the fixed cost per unit decreases as production volume increases, thus spreading the fixed costs over more units.