The following data is given for the Bahia Company: Overhead is applied on standard labor hours.
The fixed factory overhead volume variance is
A) $65 unfavorable
B) $65favorable
C) $540 unfavorable
D) $540 favorable

Question

The following data is given for the Bahia Company:  Overhead is applied on standard labor hours.
The fixed factory overhead volume variance is
A) $65 unfavorable 
B) $65favorable 
C) $540 unfavorable 
D) $540 favorable

Quizplus · Accepted Answer

The fixed factory overhead volume variance is calculated as follows:

Fixed Overhead Volume Variance = (Standard Hours - Actual Hours) x Fixed Overhead Rate

Given data: 
Standard Hours = 2,300 
Actual Hours = 2,200 
Fixed Overhead Rate = $5 per hour

Fixed Overhead Volume Variance = (2,300 - 2,200) x $5 = $500 unfavorable

Therefore, the correct answer is C) $540 unfavorable.

The Following Data Is Given for the Bahia Company