The following information is available for Baxter Manufacturing for April:
$\begin{array}{lrr}
\text { Actual machine hours } &840\
\text { Standard machine hours allowed} &900\
\text { Denominator activity (machine hours) } &1,000\
\text {Actual fixed overhead costs } &\$3,800\
\text { Budgeted fixed overhead costs } &\$4,000\
\text { Predetermined overhead rate ( $ \$ 1 $ variable $ +\$ 4 $ fixed) } &\$\quad5\
\end{array}$

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Is the production volume variance for April favorable or unfavorable?
A) Favorable.
B) Unfavorable.

Question

The following information is available for Baxter Manufacturing for April:
$\begin{array}{lrr}
  \text { Actual machine hours } &840\
 \text {  Standard machine hours allowed} &900\
 \text { Denominator activity (machine hours) } &1,000\
 \text {Actual fixed overhead costs  } &\$3,800\
 \text { Budgeted fixed overhead costs } &\$4,000\
 \text { Predetermined overhead rate ( $ \$ 1 $ variable $ +\$ 4 $ fixed) } &\$\quad5\
\end{array}$

-
Is the production volume variance for April favorable or unfavorable?
A) Favorable.
B) Unfavorable.

Quizplus · Accepted Answer

The production volume variance is unfavorable because the standard machine hours allowed (900) are less than the denominator activity (1,000), indicating under-utilization of capacity.

The Following Information Is Available for Baxter Manufacturing for April