What is the volume variance in fixed overhead Is the volume

What is the volume variance in fixed overhead? Is the volume variance in fixed overhead favorable or unfavorable?

Use the following scenario to help with the questions:

DeFleur manufactures bicycles. The bicycles are manufactured in two divisions. In the framing division, the carbon bicycle frames are manufactured. In the assembly division, the components are assembled to the frame and the bike is ready for sale. There is no market for the unassembled frames and all manufactured frames are transferred to the assembly division. For the purposes of performance evaluation, the framing division transfers the completed frames to the assembly division at the budgeted standard cost of a frame. The budgeted units of production for the framing division is 1,000, all of which will be transferred to the assembly division at the standard full absorption cost.

The budgeted costs for the framing division are as follows:

1.  Standard variable overhead is applied to products on the basis of direct labor hours at a rate of $4/unit produced.

Budgeted Fixed Overhead is $30,000 and the standard fixed cost per unit is based on the budgeted units of production.

Actual data for the period relating to the costs are as follows:

2. The framing division worked 7,500 direct labor hours during the year at a total cost of $93,750.

3.  A total of 9,000 carbon-fiber layers were purchased and used in production during the year at a total cost of $171,000

4. Total Budgeted cost for the framing department was $330,000. The total actual cost was $300,750

(Note that all the questions on variance are with respect to the framing department.)

Direct Materials per unit: 10 layers of carbon-fiber at $20/layer	$200.00
Direct Labor per unit: 8 hours at $12/hour	$96.00

Solution

Framing Department Budgeted Units 1000 Standard Data Direct Material 10 20 200 Direct Labor 8 12 96 Variable OH 8 0.5 4 Budgeted FOH 30 (30000/1000) Total Cost PU 330 Actual Units 800 Actual Data Direct Material 9000 19 171000 Direct Labor 7500 12.5 93750 Variable OH 7500 0.53 4000 Budgeted FOH 32000 Total Cost PU 300750 Actual Units 800 Revised Standard Cost Direct Material 8000 20 160000 Direct Labor 6400 12 76800 Variable OH 6400 0.5 3200 Budgeted FOH 24000 Total Cost PU 264000 Fixed OH Volume Variance:: Budgeted Production 1000 Actual Production 800 Standard FOH Aborption Rate 30 Per Unit Absorbed FOH (800*30) 24000 Budgeted FOH (1000*30) 30000 Fixed OH Volume Variance:: -6000 Adverse UF