Petra Company uses standard costs for cost control and internal reporting. Fixed costs are budgeted at

\($36,000\) per month at a normal operating level of 10,000 units of production output. During October, actual fixed costs were \($40,000\), and actual production output was 12,000 units.

Required

a. Determine the fixed overhead budget variance.

b. Assume that the company applied fixed overhead to production on a per-unit basis. Determine the fixed overhead volume variance.

c. Was the fixed overhead budget variance from requirement

(a) affected because the company operated above the normal activity level of 10,000 units? Explain.

d. Explain the possible causes for the volume variance computed in requirement (b). How is reporting of the volume variance useful to management?