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Arco Inc. fixed overhead volume variance

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31. Corresponds to CLO 8(b) Arco Inc.'s fixed overhead budget is $400,000; the standard fixed overhead rate is $5 per direct labor hour or $10 per unit of product. During the immediate past year Arco produced 45,000 units of product, incurred $385,000 of fixed overhead, and used 82,500 direct labor hours. How much is Arco's fixed overhead volume variance?

a $15,000 unfavorable
b $15,000 favorable
c $50,000 unfavorable
d $50,000 favorable.

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Solution Summary

The solution determines the fixed overhead volume variance.

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Volume variance is the difference between the static budget (standard quantity allowed x predetermined ...

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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