Day Inc., uses a standard cost system. Last year\'s records showed the following information: What is the fixed overhead volume variance? $6,750 unfavorable $6,750 favorable $1,000 unfavorable $1,000 favorable Solution Answer: Fixed overhead volume variance = Absorbed Fixed overhead - Budgeted Fixed overhead = (12000 Units *3 hours * $0.75) – $33750 = $27000 -$33750 =$6750 Favorable .

1. Day Inc., uses a standard cost system. Last year's records showed the following information:
What is the fixed overhead volume variance?
$6,750 unfavorable
$6,750 favorable
$1,000 unfavorable
$1,000 favorable
Actual direct labor hours 35,500
Actual factory overhead ($35,000 fixed) $112,400
Actual units produced 12,000
Standard direct labor hours per unit 3
Standard variable overhead rate per direct labor hour $2
Standard fixed overhead rate per direct labor hour $0.75
The overhead budget for a 15,000 unit planned activity:
Variable overhead $90,000
Fixed overhead 33,750
Total $123,750
Solution
Answer:
Fixed overhead volume variance = Absorbed Fixed overhead - Budgeted Fixed overhead
= (12000 Units *3 hours * $0.75) – $33750
= $27000 -$33750
=$6750 Favorable