Benson's fixed-overhead volume variance is:
A)$10,000 favorable.
B)$15,000 favorable.
C)$15,000 unfavorable.
D)$20,000 favorable.
E)$20,000 unfavorablE.

Question

Quizplus · Accepted Answer

The fixed-overhead volume variance is calculated by multiplying the budgeted fixed overhead rate per unit by the difference between the budgeted production volume and the actual production volume.

Fixed overhead volume variance = (Budgeted fixed overhead rate per unit x (Budgeted production volume - Actual production volume))

In this case, the budgeted fixed overhead rate per unit is $5 ($50,000/10,000 units). The budgeted production volume is 10,000 units and the actual production volume is 8,000 units.

Fixed overhead volume variance = ($5 x (10,000 - 8,000)) = $10,000 unfavorable.

Therefore, the correct answer is C.

Benson's Fixed-Overhead Volume Variance Is