Use this information to answer the questions that follow.

The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows:

-The fixed factory overhead volume variance is
A) $2,000 favorable
B) $2,000 unfavorable
C) $2,500 unfavorable
D) $0

Question

Use this information to answer the questions that follow.
​
The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows:
​​
 
-The fixed factory overhead volume variance is
A) $2,000 favorable 
B) $2,000 unfavorable 
C) $2,500 unfavorable 
D) $0

Quizplus · Accepted Answer

The fixed factory overhead volume variance is calculated as (Standard Hours Allowed - Actual Hours Used) x Fixed Overhead Rate Per Hour. In this case, the standard hours allowed for 2,500 units of production is 6,250 hours (2.5hrs per unit x 2,500 units) and the actual hours used is 6,000 hours. Therefore, the fixed factory overhead volume variance is (6,250 - 6,000) x $1 per hour = $2,000 unfavorable.

Use This Information to Answer the Questions That Follow