Question

Required information

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AirPro Corp. reports the following for November.

Actual total factory overhead incurred	$	28,175
Standard factory overhead:
Variable overhead	$	3.10		per unit produced
Fixed overhead
($12,000/12,000 predicted units to be produced)	$	1.00		per unit
Predicted units to produce		12,000		units
Actual units produced		9,800		units

Volume Variance
Total fixed overhead applied
Total budgeted fixed OH
Volume variance	$2,200	Unfavorable

Answer 1

Budgeted Fixed overhead = $12,000

Budgeted units to be produced = 12,000 units

Predetermined overhead absorption rate = Budgeted fixed overhead / budgeted units to be produced = $12,000 / 12,000 units = $1 per unit

Total fixed overhead applied = Acutal units produced * Predetermined overhead rate = 9,800 units * $1 = $9,800

Total fixed overhead applied	$9,800
(-) Total budgeted fixed overhead	( $12,000 )
Volume variance	$2,200	Unfavorable

As the fixed overhead applied is less than the budgeted fixed overheads, the variance is unfavorable.