The standard variable overhead cost rate for the Gordon Company is $13.25 per unit. Budgeted fixed overhead cost is $80,000. The company budgeted 8000 units for the current period and actually produced 4100 finished units. What is the fixed overhead volume variance? Assume the allocation base for fixed overhead costs is the number of units expected to be produced.
A)$39,000 favorable
B)$25,675 unfavorable
C)$25,675 favorable
D)$39,000 unfavorable

Question

Quizplus · Accepted Answer

Fixed overhead volume variance = (Budgeted units - Actual units) x Budgeted fixed overhead rate
= (8000 - 4100) x (Budgeted fixed overhead cost / Budgeted units)
= 3900 x (80000 / 8000)
= 3900 x 10
= $39,000 unfavorable

The Standard Variable Overhead Cost Rate for the Gordon Company