*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

*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 formula for fixed factory overhead volume variance is: 
Fixed factory overhead volume variance = Budgeted fixed factory overhead - (Actual hours x Fixed factory overhead rate)

Since the question indicates that actual hours are equal to standard hours for units produced, the actual hours are equal to the budgeted hours. Therefore, the fixed factory overhead volume variance reduces to:

Fixed factory overhead volume variance = Budgeted fixed factory overhead - (Budgeted hours x Fixed factory overhead rate)

Substituting the given values into the formula:

Fixed factory overhead volume variance = $30,420 - (8,460 x $2.50) 
Fixed factory overhead volume variance = $30,420 - $21,150 
Fixed factory overhead volume variance = $9,270 unfavorable

Therefore, the correct answer is C, $1,701.00 unfavorable, as it is the only option that represents an unfavorable variance.

*Actual Hours Are Equal to Standard Hours for Units Produced