Volume variance specifically relates to the difference between the actual level of activity and the expected level of activity based on the budget for fixed and variable costs. It reflects how much of the variance from the budget is due to changes in the volume of output or sales rather than pricing or efficiency issues.
When we state that it is solely due to changes in pricing, we overlook the fundamental aspect of what volume variance measures. Volume variance primarily arises from changes in the number of units sold or produced rather than from any adjustments in pricing strategy. Therefore, this statement misrepresents the nature of volume variance, which is fundamentally about the volume of activity, not pricing.
Other options accurately reflect the characteristics of volume variance: it genuinely results from volume changes, contributes to master budget variances by helping to illustrate how actual performance compares to budgeted expectations, and can indeed be misleading in terms of reflecting true operational efficiency due to external factors unrelated to volume, such as pricing strategy or cost management. Thus, the assertion that volume variance is solely attributable to changes in pricing is false and misrepresents the concept.