Use this information to answer the questions that follow.

*Actual hours are equal to standard hours for units produced.
-The fixed factory overhead volume variance is
A) $1,701.00 favorable
B) $4,866.75 unfavorable
C) $1,701.00 unfavorable
D) $4,866.75 favorable

Question

Use this information to answer the questions that follow.
​
  *Actual hours are equal to standard hours for units produced.​
-The fixed factory overhead volume variance is
A) $1,701.00 favorable 
B) $4,866.75 unfavorable 
C) $1,701.00 unfavorable 
D) $4,866.75 favorable

Quizplus · Accepted Answer

The fixed factory overhead volume variance measures the difference between the actual fixed overhead cost incurred and the budgeted fixed overhead cost based on the standard hours allowed for the units produced.

In this case, the information given states that actual hours are equal to standard hours for units produced. Therefore, the fixed factory overhead volume variance should be zero, indicating that the actual fixed overhead cost incurred is equal to the budgeted fixed overhead cost.

However, none of the answer choices include zero as an option. The closest option is C, which states a $1,701.00 unfavorable variance. But this would only be accurate if the actual fixed overhead cost incurred was $1,701.00 more than the budgeted fixed overhead cost. Without more information, we cannot determine if this is the case.

Therefore, the best answer is C, because it is the closest option to zero and the only option that is remotely plausible.

Use This Information to Answer the Questions That Follow