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26 December, 15:18

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.

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  1. 26 December, 15:44
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    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.
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