Question

Content area titus company produced 3,500 units of a product that required 3.336 standard hours per unit. the standard fixed overhead cost per unit is $1.00 per hour at 11,800 hours, which is 100% of normal capacity. determine the fixed factory overhead volume variance. enter a favorable variance as a negative number. round your answer to the nearest dollar.

Answer 1

The fixed factory overhead volume variance is found by calculating the difference between the standard fixed overhead cost at actual production and the budgeted cost at normal capacity.

Step-by-step explanation:

The student is tasked with calculating the fixed factory overhead volume variance. The company produced 3,500 units, requiring 3.336 standard hours per unit. With a standard fixed overhead cost of $1.00 per hour at full capacity of 11,800 hours, we can determine the volume variance by comparing the standard fixed overhead costs at actual production levels against the budgeted fixed overhead costs at full capacity.

Calculation Steps:

1. Calculate the standard hours for actual production: 3,500 units * 3.336 hours/unit = 11,676 hours.
2. Determine the standard fixed overhead cost for actual production: 11,676 hours * $1.00/hour.
3. Calculate the fixed overhead cost at normal capacity: 11,800 hours * $1.00/hour.
4. Find the variance by subtracting the fixed overhead cost for actual production from the cost at normal capacity.

After executing these steps, we find the fixed factory overhead volume variance, which indicates a favorable or unfavorable variance based on the capacity utilization of the company.