Clarkson Company The following information is provided for Clarkson Company for the month of September:
Refer to Clarkson Company. What is the volume variance?

Question

Clarkson Company The following information is provided for Clarkson Company for the month of September:
 Refer to Clarkson Company. What is the volume variance?

Quizplus · Accepted Answer

The volume variance is calculated as follows: Actual quantity – Budgeted quantity × Standard price. 
In September, the budgeted quantity was 500 units, and the actual quantity was 400 units. The standard price was $2 per unit. 
Therefore, the volume variance is (400 – 500) × $2 = $200 F. 
However, the question asks for the volume variance in terms of labor cost, not total cost. Since labor cost is only a portion of the total cost, the volume variance in terms of labor cost will be less than $200 F. 
The labor cost per unit is $3.75 ($2.25 + $1.50), so the volume variance in terms of labor cost is (400 – 500) × $1.50 = $150 F. 
Therefore, the best choice is C, $190 F, which is closest to the actual volume variance in terms of labor cost.

Clarkson Company the Following Information Is Provided for Clarkson Company