The standard variable overhead rate for Unbeatable Toys is $5. Budgeted fixed overhead is $20,000. Unbeatable Toys budgeted production was 2,000 units for the current period and actual production was 1,950. What is the production volume variance?
A) $250 unfavorable
B) $500 favorable
C) $500 unfavorable
D) $250 favorable

Question

Quizplus · Accepted Answer

The production volume variance is calculated as (Budgeted Production - Actual Production) x Fixed Overhead Rate per Unit. The fixed overhead rate per unit is $20,000 / 2,000 units = $10. The variance is (2,000 - 1,950) x $10 = $500 unfavorable.

The Standard Variable Overhead Rate for Unbeatable Toys Is $5