This is the difference between the number of units budgeted for the year and the number of units actually produced during the year. The fixed overhead production-volume variance is Budgeted Fixed Overhead ? Fixed Overhead Applied.
The fixed overhead production volume variance is Budgeted Fixed Overhead ? Fixed Overhead Applied. Fixed Overhead Applied is the fixed overhead application rate per unit multiplied by the number of units actually produced. The fixed overhead application rate per unit is $600,000 budgeted FOH ÷ 200,000 budgeted production, or $3 per unit. A total of 190,000 units were produced, so the amoiunt of fixed overhead applied was $3 × 190,000 = $570,000. Budgeted Fixed Overhead was $600,000. Thus, the Fixed Overhead Production-Volume Variance was $600,000 ? $570,000 = $30,000. Because the budgeted fixed overhead was greater than the applied fixed overhead, this means that the actual volume produced was lower than the budgeted volume and so the variance is unfavorable.
This is the incurred fixed overhead minus fixed overhead applied. The fixed overhead production-volume variance is Budgeted Fixed Overhead ? Fixed Overhead Applied.
This is budgeted fixed overhead minus incurred fixed overhead. The fixed overhead production-volume variance is Budgeted Fixed Overhead ? Fixed Overhead Applied.
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