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Question - Amado Company uses a standard cost system in which it applies manufacturing overhead to units of product on the basis of direct labor hours. The information below is taken from the company's flexible budget for manufacturing overhead:
Percent of capacity
70%
80%
90%
Direct labor hours
21,000
24,000
27,000
Variable overhead
$ 42,000
$ 48,000
$ 54,000
Fixed overhead
108,000
Total overhead
$150,000
$156,000
$162,000
During the year, the company operated at exactly 80% of capacity, but applied manufacturing overhead to products based on the 90% level. What the company fixed overhead volume variance for the year?
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