For the following questions, circle the best response.
Use the following data for Questions 7 through 10.
Air Fresh Industries uses a standard overhead costing system for the production of its EnergyPro cooling systems. Based on a capacity of 120,000 direct labor hours, the standard costs per unit of EnergyPro are applied to production as follows:
Variable overhead portion | 2 hours @ $16 = $32 |
Fixed overhead portion | 2 hours @ $10 = $20 |
During August, 30,000 units of EnergyPro were scheduled for production, but only 27,000 units were actually produced. Actual direct labor cost incurred was $885,600 for 55,350 actual hours of work. Actual variable overhead cost incurred was $863,450, and actual fixed overhead cost was $622,000.
The fixed overhead volume variance was
a. $22,000 U.
b. $46,500 U.
c. $60,000 U.
d. $46,500 F.
e. $60,000 F.
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