Final answer:
It is true that fixed MOH budget variances are used to measure the difference between actual and budgeted fixed costs to analyze cost control effectiveness (a).
Step-by-step explanation:
To answer the student's question, we must understand that fixed manufacturing overhead (MOH) costs are those that do not change with the level of production, such as rent, machinery, or research and development. It is true that to analyze fixed variances, fixed manufacturing overhead budget variances are calculated. These calculations measure the difference between the actual fixed manufacturing overhead costs incurred during a period and the budgeted fixed costs as contained in the flexible budget.
This analysis is vital for understanding how effectively a business is controlling its fixed costs and for making future strategic decisions. The average fixed cost curve typically illustrates a downward trend as production increases, due to the 'spreading the overhead', which means allocating the total fixed costs over a larger number of units produced, thereby reducing the cost per unit.