Xero Company's standard factory overhead rate is $3.75 per direct labor hour (DLH),calculated at 90% capacity = 900 standard DLHs.In December,the company operated at 80% of capacity,or 800 standard DLHs.Budgeted factory overhead at 80% of capacity is $3,150,of which $1,350 is fixed overhead.For December,the actual factory overhead cost was $3,800 for 840 actual DLHs,of which $1,300 was for fixed factory overhead.What is the factory overhead production-volume variance for December?
A)$0.
B)$150 unfavorable.
C)$225 favorable.
D)$425 unfavorable.
E)$650 unfavorable.

Question

Quizplus · Accepted Answer

The factory overhead production-volume variance is unfavorable when actual production is less than budgeted production. In this case, the budgeted production is 800 standard DLHs, and the actual production is 840 actual DLHs. The unfavorable variance is $150.

Xero Company's Standard Factory Overhead Rate Is $3