Franklin Glass Works uses a standard cost system in which manufacturing overhead

Question

Franklin Glass Works uses a standard cost system in which manufacturing overhead is applied on the basis of standard direct labor-hours. Each unit requires five standard hours of direct labor for completion. The denominator activity for the year was based on budgeted production of 110,000 units. Total overhead was budgeted at $1,400,000 for the year, and the fixed manufacturing overhead rate was $2.50 per direct labor-hour. The actual data pertaining to the manufacturing overhead for the year are presented below:

Actual production 108,000 units
Actual direct labor-hours 330,000 direct labor-hours
Actual variable manufacturing overhead $242,000
Actual fixed manufacturing overhead $564,000

Franklin's fixed manufacturing overhead volume variance for the year is:
$32,500 unfavorable
$25,000 unfavorable
$5,500 favorable
$313,500 favorable

Explanation / Answer

$25,000 unfavorable

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