Problem
The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for fixed factory overhead) based on 100% of normal capacity of 80,000 machine hours. The standard cost and the actual cost of factory overhead for the production of 15,000 units during August were as follows:
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Actual:
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Variable factory overhead
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$360,000
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Fixed factory overhead
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104,000
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Standard hours allowed for units produced:
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60,000 hours
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What is the amount of the fixed factory overhead volume variance?
a. $26,000 unfavorable
b. $14,000 unfavorable
c. $12,000 favorable
d. $12,000 unfavorable.