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The standard cost sheet for one of the Vitton Company's products is presented below.
*Rate based on expected activity of 12,000 hours
The following results for last year were recorded.

-The fixed overhead volume variance is
A) $4,000 unfavourable.
B) $4,000 favourable.
C) $6,000 favourable
D) $6,000 favourable.

Question

Use the following information to answer the next question(s):
The standard cost sheet for one of the Vitton Company's products is presented below.
  *Rate based on expected activity of 12,000 hours
The following results for last year were recorded.
 
-The fixed overhead volume variance is
A) $4,000 unfavourable. 
B) $4,000 favourable. 
C) $6,000 favourable 
D) $6,000 favourable.

Quizplus · Accepted Answer

The fixed overhead volume variance is unfavourable when the actual activity level is less than the budgeted activity level. In this case, the actual activity level is 10,000 units, which is less than the budgeted activity level of 12,000 units. Therefore, the fixed overhead volume variance is unfavourable.

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