Croissant Company's standard fixed overhead cost is $6 per direct labor hour based on budgeted fixed costs of $600,000. The standard allows 1 direct labor hour per unit. During 2016, Croissant produced 110,000 units of product, incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labor.
What is Croissant's fixed overhead volume variance for 2016?
A) $60,000 (U)
B) $24,000 (F)
C) $36,000 (U)
D) $60,000 (F)

Question

Quizplus · Accepted Answer

The fixed overhead volume variance is calculated as the difference between the budgeted fixed overhead based on standard hours allowed for actual production and the budgeted fixed overhead. The standard hours allowed for 110,000 units is 110,000 hours. The budgeted fixed overhead is $600,000. Therefore, the variance is (110,000 hours - 100,000 hours) * $6 = $60,000 (Favorable).

Croissant Company's Standard Fixed Overhead Cost Is $6 Per Direct