Dvorak Company produced 3,500 units of product that required 1.5 standard hours per unit. The standard fixed overhead cost per unit is $2.95 per hour at 5,650 hours, which is 100% of normal capacity. Determine the fixed factory overhead volume variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. $
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Factory Overhead Volume Variance
Fixed overhead volume variance is the amount of fixed overhead actually incurred over and above the budgeted fixed overhead expense. Fixed overhead volume variance can be positive or negative. Positive variance means unfavourable condition where actual expense is more than budgeted. Negative variance means favourable condition where actual expense is less than budgeted. It is calculated by using the formula:
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