Kelsey owns a fruit smoothie shop at the local mall. The budgeted monthly fixed overhead costs consist of the store lease payment (\($1,000),\) advertising (\($250)\), equipment depreciation

(\($125)\), and store Wi-Fi (\($80).\) Actual fixed overhead expenses for June were \($1,600\).

When calculating the fixed overhead rate, Kelsey anticipated selling 4,800 smoothies during each summer month. She actually sold 5,000 in June.

1. What is the fixed overhead budget variance for the month of June? Is the variance favorable or unfavorable?

2. Will Kelsey’s fixed overhead volume variance for the month of June be favorable or unfavorable? Explain.