Question

Actual fixed overhead for Kapok Company during March was $92,780. The flexible budget for fixed overheadthis period is $89,000 based on a production level of 5,000 units. If the company actually produced 4,200 units what is the fixed overhead volume variance for March?
A. $ 3,780 favorable.
B. $18,020 unfavorable.
C. $14,240 unfavorable.
D. $ 3,780 unfavorable.
E. $14,240 favorable.

Answer 1

Answer:

D. $ 3,780 unfavorable.

Explanation:

The computation of the fixed overhead volume variance is shown below:

=  Actual fixed overhead - budgeted fixed overhead

= $92,780 - $89,000

= $3,780 unfavorable

Since the actual fixed overhead is more than the budgeted fixed overhead by $3,780 which reflect unfavorable variance.

The production level would not be considered in the computation part. So, it is ignored.