The standard variable overhead cost rate for the Gordon Company is $11.25 per unit. Budgeted fixed overhead cost is $50,000. The company budgeted 5,000 units for the current period and actually produced 4,150 finished units. What is the fixed overhead volume variance? Assume the allocation base for fixed overhead costs is the number of units expected to be produced.

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Quizplus · Accepted Answer

The fixed overhead volume variance is calculated as (Budgeted units - Actual units) x Fixed overhead rate per unit. The fixed overhead rate per unit is $50,000 / 5,000 = $10. The variance is (5,000 - 4,150) x $10 = $8,500 unfavorable. However, the choices provided do not match this calculation, indicating a possible error in the question or choices.

The Standard Variable Overhead Cost Rate for the Gordon Company