Answer (C) is correct . The production volume variance is based on the over- (or under-) applied fixed overhead for the period. The fixed overhead allocation rate is $.50 per unit ($40,000 ¡Â 80,000?units). With actual results exceeding the standard by 20,000?units, the overapplied overhead would have been $10,000 (20,000 units ¡Á $.50).Answer (A) is incorrect because The variance in net income is $4,000. Answer (B) is incorrect because The volume variance is $10,000. Answer (D) is incorrect because The difference in unit sales and production is 20,000 units, not dollars.
|