The following information pertains to the Braun Company for March: Using the four-variance method of factory overhead variance analysis, what is the volume variance?

Question

The following information pertains to the Braun Company for March:  Using the four-variance method of factory overhead variance analysis, what is the volume variance?

Quizplus · Accepted Answer

Volume variance = budgeted fixed cost - standard hours allowed x fixed rate
Volume variance = $30,000* - 11,000** x $3
Volume variance = $3,000 favorable (because standard hours allowed exceeded budgeted hours)
* Budgeted production x standard hours allowed per unit x fixed factory overhead rate
(20,000 x .5 x $3 = $30,000)
** Standard hours allowed = actual units x standard hours per unit
11,000 = 22,000 x .5

The Following Information Pertains to the Braun Company for March