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Question - Jewel Company calculates its predetermined rates using practical volume, which is 300,000 units. The standard cost system allows two direct labour hours per unit produced. Overhead is applied using direct labour hours. The total budgeted overhead is $3,200,000 of which $900,000 is fixed overhead. The actual results for the year are as follows:
Units produced:
280,000
Direct labour:
570,000 hours @ $9 per hour
Variable overhead:
$2,320,000
Fixed overhead:
$872,000
What is the fixed overhead volume variance?
$8,000 U
$24,000 U
$45,000 U
$28,000 F
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