Tip Top Corp. produced 2,200 units of product that required 1.5 hours per unit.

Question

Tip Top Corp. produced 2,200 units of product that required 1.5 hours per unit. The standard fixed overhead cost per unit is $.97 per hour at 3,170 hours, which is 100% of normal capacity. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. What is the fixed factory overhead volume variance? Tip Top Corp. produced 2,200 units of product that required 1.5 hours per unit. The standard fixed overhead cost per unit is $.97 per hour at 3,170 hours, which is 100% of normal capacity. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. What is the fixed factory overhead volume variance?

Explanation / Answer

Fixed Overhead Volume Variance = (Normal Activity - Actual Activity) × Fixed Overhead Application Rate
= {3,170 - (2,200 x 1.5)} x 0.97
= (3,170 - 3,300) x 0.97
= - $126.10 Favorable

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