Claymore Corp. has the following information about its standards and production activity for September. The volume variance is: $\begin{array}{lll}
\text { Actual total factory overhead incured } &\$28,175\
\text {Standard factory overhead: } &\
\text { Variable overhead } &\$3.10&\text { per unit produced }\
\text { Fixed overhead } &\
\text { $ \$ 12,000 / 6,000 $ estimated units to be produced } &\$2&\text {per unit}\
\text { Actual units produced } &4,800&\text { units}\
\end{array}$

A) $2,400F.
B) $3,695U.
C) $1,295U.
D) $1,295F.
E) $2,400U.

Question

Claymore Corp. has the following information about its standards and production activity for September. The volume variance is: $\begin{array}{lll}
  \text { Actual total factory overhead incured } &\$28,175\
 \text {Standard factory overhead:  } &\
 \text {  Variable overhead } &\$3.10&\text { per unit produced }\
 \text { Fixed overhead } &\
 \text { $ \$ 12,000 / 6,000 $ estimated units to be produced } &\$2&\text {per unit}\
 \text {  Actual units produced } &4,800&\text { units}\
\end{array}$

A) $2,400F.
B) $3,695U.
C) $1,295U.
D) $1,295F.
E) $2,400U.

Quizplus · Accepted Answer

The volume variance is calculated as the difference between the budgeted fixed overhead for the expected production and the applied fixed overhead for the actual production. The budgeted fixed overhead is $12,000, and the applied fixed overhead for 4,800 units is $9,600 (4,800 units x $2 per unit). The variance is $12,000 - $9,600 = $2,400 unfavorable (U).

Claymore Corp A) $2,400F