The standard variable overhead cost rate for the Croskey Company is $12 per unit. Budgeted fixed overhead cost is $60,000. The Croskey Company budgeted 4,000 units for the current period and actually produced 3,860 finished units. What is the production volume variance, assuming that the allocation base for fixed overhead costs is the number of units expected to be produced?

Question

Quizplus · Accepted Answer

The production volume variance is calculated as (Budgeted units - Actual units) x Fixed overhead rate per unit. Here, (4,000 - 3,860) x ($60,000 / 4,000) = 140 x $15 = $2,100 unfavourable.

The Standard Variable Overhead Cost Rate for the Croskey Company